ISLAMABAD: The sugarcane farmers, growers, and sugar mills should get ready to bear the brunt as the government has only approved the export of only 425,000 tonnes of sugar from 1.9 million surplus sugar.
An absence comprehensive sugar export policy at government level to dispose of the surplus sugar might cause the late start of crushing season in the country as above 1.9 million tonnes of sugar is in surplus while less than half quantity is permitted for export by the government. This situation can also add miseries to farmers/growers and millers as sugar manufacturers are unable to clear their dues due to an absence of subsidy by the government and low price of the commodity in the local and international market.
To take control of the current situation, Pakistan Sugar Mills Association (PSMA) has asked the government to adopt and implement export policy regime as the industry has been exporting for the last five years and is saving US$ 3 billion as import substitute. The PSMA has also that said the current stocks of sugar will last until February 2018.
Punjab, Sindh, Khyber Pakhtunkhwa produced in excess of 7 million tons compared to 5.1 million tons last year. Similarly, another bumper crop of sugarcane during the coming crushing season and surplus will be far in excess. The federal government should facilitate export so that the industry can start crushing on time, said PSMA Punjab Zone in a letter to the Punjab Food secretary.
It is to note here that the PSMA had approached the federal government in October 2016 and requested for export of one million tonnes of sugar in view of the anticipated production for the crushing season 2016-17 when international market was at a level of US $ 545 per ton. However, commerce ministry at that time gave approval for export of 225,000 tons. Subsequently, PSMA again approached the government, asking for export of 500,000 tons of sugar during the crushing season, but only export of 200,000 tons of sugar was permitted.
Also, a Sugar Advisory Board in its meeting held on 17th May 2017 had worked out a surplus of 1.2 million tons and recommended to the ministry of commerce to allow the same for export. But, only 300,000 tonnes were approved in the federal cabinet’s economic committee meeting (ECC). The commerce ministry and State Bank of Pakistan have not yet notified for export to take place.
According to PSMA, now international market price of sugar is in the range of US $ 388 tons which translates to almost Rs 40/kg which does not cover even the cost of sugarcane and has made impossible for the sugar millers to dispose of the surplus at Rs 40/kg and discharge financial obligations, including payments to the sugarcane farmers in the absence of subsidy. At a rate of 180/40 of sugarcane, the input cost of sugarcane component in the price of one kg of sugar is Rs 49. During the year 2009 when sugar price escalated due to shortage, the then-food secretary Irfan Elahi worked out conversion cost for producing one kg of sugar at Rs 9/kg.
“If we take the same parameters as worked out by Punjab government and reported to Lahore High Court the price of sugar comes to Rs 58/kg without tax, “ PSAMA Punjab zone said.
It is worth mentioning here that federal government has fixed assessable price for the purpose of sales tax at Rs 60/kg. For registered persons rate is applied at Rs 8per cent whereas for sales to unregistered persons the rate of 10 per cent is applicable. Therefore, as per PSMA, for sales to registered persons price of sugar should not be less than Rs 62.80 per kg and for sales to unregistered persons should not be less than Rs 64/kg for the industry to break even.
