Sugar Advisory Board (SAB), a body comprising representatives of federal and provincial governments and sugar mills' representatives, met Tuesday in Islamabad to discuss current stock position, prices and prospects of new crop. Secretary Ministry of Industries and Production (MoI&P), Shafqat Naghmi chaired the meeting. Sugar prices in retail market have touched Rs 80 per kilogram in rural areas due to an alleged nexus between policymakers and sugar mill owners. Chairman PSMA Shunaid Qureshi did not attend the meeting.
Provincial Cane Commissioners, sources claim, informed the meeting that current stocks are of about 882,000 MT of which 150,000 MT to be procured by the Trading Corporation of Pakistan (TCP) which 500,000 MT is meant for export - a quantity approved by the Economic Co-ordination Committee (ECC) of the Cabinet. According to the MoI&P, stocks with Punjab are of about 400,000 MT, Sindh 300,000 MT and KPK 23000 MT. This implies that stocks for open market will be about 232,000 MT till the end of current month against the monthly consumption of 390,000 MT. However, MoI&P claims that stocks are sufficient till January. MoI&P in its summary dated October 28, 2013 had claimed that stocks with the mills are 182, 861, 3 MT which would be enough till March 15, 2013.
The reason behind current prices hike is shortage of stock but the representatives of sugar mill owners are of the view that prices will come down from December with the arrivals of new sugar in the market. President Pakistan Sugar Mills Association Punjab, Riaz Qadeer Butt told Business Recorder that export of 500,000 MT will be materialised in five months, as 27000 MT sugar has been exported so far. At the same time, he said, mill owners are least interested in sugar export because the government has not yet issued any SRO meant for rebate. He was of the view when the local sugar rates will be better, no sugar mill will export the commodity. Replying to a question regarding floating of "black stock" in the market, he said that black stock is released during the initial crushing days, adding that now stock figures are real.
He further stated that Federal Board of Revenue (FBR) will invoke section 40 B of the Sales Tax Act, 1990 according to which tax officials can be deputed at mills to oversee sugar stocks. In reply to another question, an official of MoI&P told Business Recorder that Provincial Cane Commissioners informed the meeting that out of Rs 260 million, Rs 170 million of the growers are yet to be paid by the mills.
He said, the export of sugar has been linked to payment to growers and every mill which intends to export will have to produce a clearance certificate to be issued by the PSMA or Provincial Cane Commissioner. "There will be no further intervention in sugar matters till March 31, 2013. After the crushing season is over, meeting will be convened to review stock position for chalking out future strategy," he continued.
Riaz Qadeer Butt stated that those sugar mills which did not pay to growers will now pay them prior to the commencement of crushing season. He claimed that current sugar stock stood at 950,000 MT, which is more than the stocks mentioned by the MOI&P. He further claimed that Pakistan's sugar production is estimated at 5.4 million MT this year.
Answering yet another question, he said that investors and stockiest are floating their stocks in the market and making money and not the mill owners. He was of the view that mill owners are holding back stocks for export purposes. An insider who requested anonymity be quoted said that every sugar mill owner, except Jahangir Khan Tarin, is showing a loss of Rs 350 million.