ISLAMABAD: The federal government has empowered Ministry of Industries and Production (MoI&P) to take action against responsible sugar mills if there is a spike in price of sugar in the wholesale market, well-informed sources told Business Recorder.

Sharing the details, sources said on August 22, 2024, Industries and Production Division informed the ECC that the Sugar Advisory Board’s (SAB) meeting was held in the Ministry of Industries & Production, under the chairmanship of Federal Minister for Industries and Production on August21, 2024. The Board reviewed the data provided by Provinces and FBR on sugar stocks for crushing year of 2023-24.

All the stakeholders agreed that existing stock of sugar was 2.773 million MT as on August 15, 2024 and the total consumption during the last 8.5 months of current crushing year 2023-24 was 4.797 million MT.

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It was also agreed in the SAB that in the next 3.5 months the expected off would follow the same pattern as in previous 8.5 months and the consumption would stand at around 1.974 million MT.

Therefore, after taking into account the quantity yet to be exported out of 0.150 million MT i.e. 0.055 million MT and possible exports to Tajikistan of 0.040 million MT, the remaining expected surplus sugar (carry over to next year) would be 0.704 million MT.

After detailed deliberations, it was agreed that even if export of 0.100 million MT was allowed, the opening inventory for next cropping season 2024-25 is expected to be 0.604 million MT, which would be higher than the one-month national consumption.

For this reason, SAB recommended additional export of 0.100 million MT of surplus sugar be allowed, on the same terms and conditions as allowed by ECC of the Cabinet in its decision of June 13, 2024 with the following modifications: (i) in view of procedural delays encountered during export of sugar, the period allowed for export of sugar from the date of allocation of quota by respective Cane Commissioner may be extended from 45 days to 60 days; (ii) export proceeds shall be received in advance in case of Afghanistan only through banking channel, however, export proceeds in case of LCs may be allowed within a period of 60 days of opening of LC for export of sugar to other destinations;(iii) benchmark for retail price of sugar may be delinked from permission to export sugar as retail price is not directly under the control of sugar mills; and (iv) condition of revoking of export quota in case of non-payment of dues of the growers from proceeds of export of sugar shall be applicable only to the non-compliant mills rather than the PSMA as a whole. During the ensuing discussion, Industries and Production Division explained that 0.150 million MT of sugar was allowed for export on June 13, 2024.

The forum observed that the benchmark for export of sugar should be wholesale price instead of retail price which would ensure appropriate monitoring of sugar prices.

The forum also proposed deregulation of sugar sector, formulation of sugar policy and proper zoning for sugarcane crop in order to cater to requirements of the country. Ministry of Planning Development & Special Initiatives observed that the Pakistan Bureau of Statistics (PBS) dashboard provides both wholesale and retail prices on daily basis which would help monitor the prices effectively.

The forum was also informed that ex-mill price was not an indicator of price trends in the market as reportedly the sugar mills involved in price manipulation had investors who hoard stocks outside the sugar mills in separate warehouses.

The forum directed Industries and Production Division to ensure daily monitoring and review of sugar stocks and prices. In case any spike in the price trend is noted, action should be taken by the Industries and Production Division against the violators forthwith.

After threadbare deliberation on the proposal of MoI&P, the ECC decided that in view of procedural delays encountered during export of sugar, the period allowed for export of sugar from the date of allocation of quota by respective Cane Commissioner shall be extended from 45 days to 60 days and export proceeds shall be received in advance in case of Afghanistan only through banking channel however, export proceeds in case of LCs shall be allowed within a period of 60 days of opening of LC for export of sugar to other destinations.

The ECC also decided that instead of taking retail price of sugar as a benchmark for continuation of permission to export sugar, wholesale price shall be made as benchmark for the permission to export sugar.

The ECC further decided that condition of revoking of export quota in case of non-payment of dues of the growers from proceeds of export of sugar shall be applicable only to the non-compliant ex-mills rather than the PSMA as a whole. The Industries and Production Division shall monitor this arrangement and shall report to the ECC in its subsequent meetings regularly till the export permission remains valid.

The ECC also directed that the Cabinet Committee on Monitoring Sugar Exports, constituted by the Federal Cabinet on June25, 2024 and notification of June 26, 2024 to ensure regular monitoring and review of sugar stocks and prices under the revised Terms of Reference (ToRs), be notified after the ratification of the decision.

In case of any spike in the price, action shall be taken by the Industries and Production Division against the violators by revoking their export permission forthwith.

Copyright Business Recorder, 2024