Millers, fearing market saturation in the wake of fresh sugar production of five million tons in addition to 1.2 million tons in unsold stock, have urged the government to allow them to export at least 1.2 million tons of white refined sugar from the existing limit of 400,000 tons.
"If the commodity is over supplied in the local markets, prices will largely fall which will subsequently inflict huge financial losses on producers," sources in Pakistan Sugar Mills Association (PSMA) told Business Recorder on Wednesday.
Sugar millers advised the government to allow them to export of sugar right from the beginning of the crushing season to improve liquidity. "The government should allow millers to export sugar or the Trading Corporation of Pakistan should be asked to procure 150,000 tons at ex-factory price from millers every month," Industry leaders said, adding that the proposed move would help stabilise rates in the local market
They said that enhancement of liquidity would enable millers to make timely payments to growers. Sources said that sugar millers earned more than $200 million against the export of 300,000 tons of sugar during the past crushing season ended in April this year.
They said that after catering the domestic demand of 4.5 million tons, they would be left with a surplus of 1.7 million tons. Pakistan Sugar Mills Association (PSMA) has also written a letter to the Prime Minister, urging the government to take concrete measures to save the industry from incurring losses.
Some millers have, however, proposed a separate pricing mechanism for domestic consumers and commercial consumers to facilitate the industry, growers and domestic consumers. They said that being the second largest agro-based industry, it helps the government earn Rs 22 billion, besides allowing growers to earn Rs 110-135 billion. According to him, vendors, other contractors, transporters and suppliers earned as much as Rs 20 billion, beside providing direct and indirect employment to 1.2 million people, particularly in rural areas.
Of the total five million tons of expected sugar production during 2012-2013, Sindh will produce 1.5 million tons, Punjab 2.9 million tons and Khyber Pakhtunkhwa is expected to produce 600,000 tons of the commodity. Pakistan produced 4.8 million tons of sugar in the year (2011-2012). Sindh produced 1.3 million tons, Punjab 3.1 million tons while Khyber Pakhtunkwa produced 1.3 million tons.