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  • Jul 25th, 2017
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Finance Minister Ishaq Dar has reportedly directed the Commerce Ministry to submit sugar export proposal after carefully reviewing prices in the domestic market and also the stock position, well-informed sources in the MoI&P told Business Recorder.

These directives were issued while approving the export of 0.3 million tons of sugar against the proposal of 0.6 million tons recommended by an inter-ministerial committee headed by Commerce Minister Engineer Khurram Dastgir Khan. The sugar industry, however, has rejected the government decision on the plea that its export is not viable sans subsidy at this juncture.

Giving the background, the sources said the ECC on December 28, 2016 allowed the export of 0.225 MT of sugar. In a subsequent decision of March 28, 2017, the ECC also allowed an additional export of 0.2 MT of sugar up to May 31, 2017 subject to the condition that in case domestic sugar price stability as compared to December 15, 2016 was not maintained, the committee would immediately recommend to the ECC to stop further exports and export quota allowed must be completed within sixty (60) days of allocation of quota or May 31, 2017, whichever came earlier. Ministry of Commerce further revealed that Pakistan Sugar Mills Association (PSMA) approached Ministry of Commerce stating that the sugar industry had produced a record quantity of sugar leading to a surplus of 1.475 MT which was resulting in delayed payments to the sugarcane growers. PSMA requested that a meeting of the Sugar Advisory Board (SAB) might be convened to review the overall availability and stock position of sugar for allowing further exports. Sugar Advisory Board (SAB), in its meeting held on May 17, 2017, recommended export of 1.2 MT sugar be allowed in view of the available surplus.

Ministry of Commerce apprised that PSMA''s request and SAB''s recommendations were discussed in the meeting of inter-ministerial committee held on May 25, 2017. On the recommendations of the committee, the ECC in its decision of June 7, 2017 decided that in order to maintain the price stability during Ramazan, the decision on allowing further exports of sugar may be deferred till last week of Ramazan and that PSMA may be asked to express their "firm resolve in writing to maintain price stability" as agreed in SAB meeting of May 17, 2017. The inter-ministerial committee reviewed sugar supply and stock position in its meeting held on June 20, 2017. The committee was briefed that the price of sugar in the domestic market remained stable which has benefited the consumer. The price in the domestic market according to the Sensitive Price Index (SPI) for the week ending on June 15, 2017 was 56.30 per kg which was 11.1 percent lower than the level of December 15, 2016 when the export of sugar was allowed by the ECC. The committee also observed that out of the total quantity of 0.425 MT allowed for export by the ECC, 0.391 MT sugar quota has, so far, been allocated by the State Bank of Pakistan (SBP) and around 0.348 MT has been exported.

Ministry of Industries and Production further apprised the committee that PSMA has assured that the instructions of the government regarding price stability of sugar will be adhered to in letter and spirit. After detailed deliberations, the committee allowed the export of 0.6 MT of sugar, in addition to the quantities already allowed for export by the ECC, subject to the conditions that: (a) the committee constituted by the Prime Minister will meet during first week of every month to review the sugar stock/export and price situation; (b) in case of any abnormal increase in the domestic price of sugar, the committee would recommend to the ECC the stoppage of further exports; (c) export quota will be approved and monitored by the State Bank of Pakistan (SBP) on first come first serve basis; and (d) exports will be completed within 60 days of quota allocation by the SBP. The committee also recommended that once 0.45 MT out of the allowed quantity of 0.6 MT is exported, the inter-ministerial committee will meet again to review the stock/export and price situation and consequently would recommend enhancement of export quantities, if deemed appropriate.

During ensuing discussion, the Chairman, ECC observed that out of total quantity of 0.425 MT [already allowed by the ECC for export of sugar], 0.348 MT sugar was exported till May 31, 2017. At this juncture, when a considerable quantity of sugar, [out of allowed quantity] was still surplus, allowing additional quantity of 0.6 MT for export of sugar in one go, would not be a prudent decision, as it might affect domestic price of the sugar. He asserted that domestic sugar price stability and maintenance of strategic reserve of sugar in the country, were the two important factors, which should be taken into consideration by Ministry of Commerce, before moving a proposal for export of sugar. He opined that the ECC in the first instance should allow export of 0.3 MT of sugar instead of proposed quantity of 0.6 MT. "If there is further need of export, Ministry of Commerce may submit a proposal to the ECC, after reviewing the stock/export and price situation in the country by the Committee constituted by the Prime Minister for the purpose," the sources quoted Finance Minister as saying.

Ministers for Planning, Development & Reform, Petroleum & Natural Resources and National Food Security & Research also endorsed the views of the Chairman ECC, the sources continued After detailed discussion, the ECC approved export of sugar 0.3 MT, in addition to the quantities already allowed for export by the ECC, subject to following conditions: (i) the committee constituted by the Prime Minister will meet during first week of every month to review tile sugar stock/export and price situation; (ii) in case of any abnormal increase in the domestic price of sugar, the committee would recommend to the ECC the stoppage of further exports; (iii) tile export quota will be approved and monitored by the State Bank of Pakistan (SBP) on first come first serve basis; and (iv) once 0.2 MT out of allowed quantity of 0.3 MT is exported, the inter-ministerial committee will meet again to review the stock/export and price situation and consequently would recommend further export quantities, if deemed appropriate.



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