Islamabad:
Sugar producers have approached the government seeking permission to export another 850,000 metric tonnes of sugar in two phases, drawing criticism as prices are already high in the domestic market.
The request to export the sweetener was tabled at a meeting of the sugar advisory board on Tuesday.
Earlier, the government had linked the export of sugar with a Rs 2 per kg increase in the retail price, meaning that if rates were to rise by Rs 2 in the country, exports would stop. Now, the sugar industry is asking to link exports with an increase of Rs 15 per kg in the domestic market.
However, the Sugar Advisory Board rejected the call to export additional sugar, stressing that price stability in the local market must first be ensured.
The Industries Minister was of the view that the export of sugar could not be allowed and even refused to consider the proposal, saying that prices should be stabilized in the domestic market.
Already, permission had been given to export 150,000 metric tons worth $90 million and their shipments began on July 16, 2024. Now, in the second phase, the industry is seeking approval to export 500,000 tons worth $300 million.
According to industry players, about 1.2 million tonnes of surplus sugar was available by mid-July, which will increase to 1.5 million tonnes by November.
In the third phase, sugar producers are looking to export 350,000 tonnes worth $200 million.
From the end of the 2023-24 cane crushing season around March 15, 150,000 metric tonnes have been allowed to be exported. So far 21,218 tons have been withdrawn from sugar mills for shipment.
However, shipments carrying only 6,800 tons crossed the border until July 20, 2024. Thus, “the amount of sugar exported so far is very negligible.”
Industry players pointed out that there were only four months left before the start of the new crushing season and asked how they could export such a large surplus during the limited time period.
He stressed that exports against letters of credit (LC) should be allowed so that shipments of sea cargo can be started.
Afghanistan has limited capacity to absorb sugar supplies from Pakistan and the time period for exports should be 60 days instead of 45 days due to issues related to the Federal Board of Revenue (FBR) and banks, he added.
The industry pointed out that the ex-factory sugar price benchmark may increase to Rs 150 per kg for the second phase of export due to increase in withholding tax from 0.20% to 2%. Its net impact on sugar price is estimated at 1.8% or Rs 2.52 per kg.
The industry claimed that carrying cost due to bank markup of Rs 2.25 per kg per month for June-August 2024 would be Rs 6.75 per kg. Therefore, the total impact is estimated at Rs 9.27 per kg.
He called for a revision of the retail price benchmarks while taking into account the levy of a federal excise duty of Rs 15 per kg on sugar processing and packaging.
For the third phase, according to the millers, in view of a possible cane harvest for the 2024-25 crushing season, which is expected to produce 7.5 to 8 million tonnes of sugar and create a surplus of 1.5 to 2 million tonnes, permission to export 350,000 tonnes worth $210 million must be scheduled for September 2024 to manage at least two-thirds of the existing surplus. “This will ensure an early start to the new crushing season.”
Millers stressed that it will also ensure timely payments to sugarcane growers and continuity in the planting of sugarcane crops.
Federal Industries and Production Minister Rana Tanveer Hussain on Tuesday directed the chief secretaries to take all possible steps to stabilize retail sugar prices across the country.
The minister chaired the sugar advisory board meeting to review sugar stock availability and price trends, a statement said.
He pointed out that ex-factory sugar prices have remained stable in recent months and called on provinces to strictly monitor retail prices as maintaining sugar prices at existing levels was the government’s primary responsibility.
He warned that any increase will not be tolerated under any circumstances.
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