The Ministry of Industries is reportedly proposing to the government to procure 100,000 tons of sugar from local mills through Utility Stores Corporation (USC) and Trading Corporation of Pakistan (TCP) to build strategic reserves, well-informed sources told Business Recorder. The newly appointed senior Minister for Industries, Chaudhry Pervez Elahi is probably not aware of any such proposal as he is yet to take charge of the Ministry, the sources added.
"We are tabling this proposal before the Economic Co-ordination Committee (ECC) of the cabinet in its next meeting scheduled to be held on May 7, 2011," the sources added. Recently Industries Ministry, in a letter to Pakistan Sugar Mills Association (PSMA) had sought the following details: (i) Outstanding payment position to sugarcane growers for 2009-10 and 2010-11 sugar crushing season; (ii) if PSMA's proposal for purchase of sugar by the USC/TCP still stands; and (iii) PSMA's views on the supply/ demand situation of sugar in the country.
According to PSMA this year production has surpassed all previous estimates and the final figures that have been received from the member mills show that Punjab produced 2,576,229 tons, Sindh 1,300,000 tons and KP produced 262,120 tons, with total 4,138,349 million tons of sugar. According to the mill owners, the payment of balance of about 50 billion can only be timely facilitated through purchase of 300,000 - 400,000 tons of sugar by the TCP or USC as submitted to Secretary Finance and the inter ministerial committee of the federal government.
The Association also claimed that this year, about 44 million tons of sugarcane has been crushed and at an average procurement price of about Rs 200 per 40/kg, the total quantum of payment works out to be around 220 billion rupees, out of which 190 billion have already been paid, and the remaining 30 billion is yet to be cleared to the small growers
Industries Ministry, sources said, is constantly monitoring the sugar market: demand, supply and prices. The MoIP will also evolve a workable mechanism in consultation with provinces, including AJ&K and Gilgit-Baltistan. Chairman PSMA, Javed Kayani argues that the industry is facing tremendous pressure to clear these outstanding payments, and the only way payment can be expedited is through purchases by the government to build a further strategic reserve with Trading Corporation of Pakistan as price of sugar is around Rs 62-63 ex-mill, which is the lowest in the world compared to landed cost of the imported sugar.