Following the directives of the federal government, State Bank of Pakistan (SBP) has linked cash incentive on export of sugar to minimum sugarcane price. Economic Co-ordination Committee (ECC) of the cabinet in its meeting held on January 13, 2016 considered the summary submitted by the ministry of commerce on "provision of cash support for export of sugar" and accordingly approved it. The summary recommended that cash support on export of sugar to be given on purchasing of sugarcane at a minimum price of Rs 180 per 40 kg.
Earlier, ECC in December last year approved cash support for incidental and freight @ Rs 13 per kg for export of 0.5 million tons of sugar up to March 31, 2016 to facilitate sugar mills. The cash support for incidental and freight will be shared equally by the federal government and the respective provincial governments.
According to SBP circular issued on Tuesday, in term of Ministry of Commerce's (MoC) Office Memorandum No 7(2)/2012-E.III dated January 19, 2016, it has been decided that federal share of cash support on export of sugar shall be provided only to those sugar mills, which purchase sugarcane at a minimum price of Rs 180 per 40-kg from the farmers.
In order to implement the decision conveyed above, the ministry of commerce has further clarified that purchase of sugarcane from farmers at minimum price of Rs 180 per 40-kg may be ensured through a certificate issued by the concerned Cane Commissioner. SBP said that all other instructions on sugar export will remain unchanged and advised authorised dealers to bring new amendment to the notice of all their constituents.
Sources said a clearance certificate, issued by the concerned Cane Commissioner to the effect that concerned sugar mill has cleared outstanding dues of the farmers upto the last season, and secondly crushing on full scale by the exporting sugar mill is already required for cash incentive on sugar export. As per the procedure, SBP will allocate sugar export quota to sugar mills on first come first served basis and exporters shall be required to ship the sugar within 45 days from the date of SBP approval or by March 31, 2016, whichever comes earlier. In addition, all sugar exports including those destined for Afghanistan and Central Asian Republics by land route will be subject to receipt of export proceeds by wire transfer through banking channels.