Sugar mills oppose new export restrictions on molasses amid ethanol boom 

LAHORE: In a detailed letter addressed to the Federal Minister for Commerce & Industries, the Pakistan Sugar Mills Association (PSMA) has laid out a compelling argument against the proposed restrictions on the export of molasses, a vital by-product of the sugar industry.

The letter, representing the concerns of non-distillery sugar mills, underscores the significant economic repercussions such restrictions could have on an already struggling industry.

The PSMA highlights in the letter, "Sugar Producers in Pakistan face cyclical sugar turmoil... The sugar industry is an overregulated industry... escalating cost of inputs... have created extreme economic and financial difficulties for the sugar industry."

The association points to a specific challenge posed by the Pakistan Ethanol Manufacturers Association (PEMA), which, through significant lobbying efforts, has managed to influence the imposition and increase of regulatory duties on molasses exports. "After 2009, PEMA got imposed Regulatory Duty on export of molasses... Now, once again, there is a move by these units to seek either a total ban or increase in regulatory duty to an astounding rate of 50%," the letter states, outlining the pressures from ethanol producers driving the push for restrictive measures.

To substantiate their concerns, the PSMA provides detailed figures demonstrating the impact of these policies:

•         Molasses production increased from 1,557,557 metric tons in 2009-10 to 3,144,060 metric tons in 2022-23, showcasing the industry's growth potential.
•         Conversely, molasses exports saw a drastic reduction, from a peak of 961,300 metric tons in 2009-10 down to just 929 metric tons in 2020-21, before a slight increase to 120,519 metric tons in 2022-23.
•         The average price per metric ton of exported molasses escalated from 8,097 in 2009-10 to 36,697 in 2022-23, underscoring the financial implications of regulatory duties on the industry's profitability.

The letter argues that these restrictions not only undermine the economic viability of sugar mills without distillery capabilities but also contravene the principles of free and fair competition, stating, "The request of PEMA... is wholly and in totality unjustified... It is against the constitutional and legal rights of the sugar manufacturers/molasses exporters."

In a direct appeal for reconsideration, the PSMA requests, "already imposed 15% Regulatory Duty on exports of Molasses may be withdrawn and a meeting may be convened with all stakeholders to discuss a way forward." This call to action highlights the association's push for a dialogue aimed at finding a balanced and equitable resolution to the dispute.