MoI proposes 0.4 million tons of sugar import: PSMA opposes move

The Ministry of Industries (MoI) has proposed to import 0.4 million tons of sugar to maintain stability in the market during the next season. This move has been strongly condemned by the Pakistan Sugar Mills Association (PSMA). "We strongly condemn the MoI for proposing import of 0.4 million tons of sugar as we have a bumper sugarcane crop with production up to 0.7 million tons above the requirement," said the Chairman of PSMA, Javed Kayani.

Official documents obtained from the MoI show that the ECC, in its meeting on July 20, 2011, had decided to rescind its earlier decision for procurement of sugar by TCP from PSMA mills, and directed the Ministry of Industries to submit firmed up position of sugar stocks in September/October 2011 for its (ECC) consideration.

According to the documents, sugar production for 2010-11 is 4.17 million tons, and at present sugar stocks stands at 1.32 million tons, which is sufficient till January, 2012, given consumption of 350,000 tons per month. The Trading Corporation of Pakistan (TCP), which remained in hot water for 'irregular import' of sugar and urea in the past, in its letter of August 18, 2011 said that it had a stock of 231,313 tons of sugar with delivery commitment of around 28,000 tons to Utility Stores Corporation (USC) for August 2011, leaving a balance of 200,000 tons for three months before crushing season starts.

The MoI, in its analysis has indicated that at the end of the current year, the stock of imported sugar with TCP would be exhausted, leaving nil strategic reserves. Suparco has forecast sugar production and consumption for the year 2011-12 as follows: sugarcane production- 53.89 million tons, projected population-179.8 million, projected domestic industrial and human consumption (25 kg per head)- 4.495 million tons, projected domestic production -4.123 million tons. This shows a deficit of 0.372 million tons.

In a meeting of Sugar Advisory Board (SAB) on September 17, 2011, average actual sugar consumption of last three years was noted at 21.5 kg per person per year, while projecting sugar demand at the rate of 25 kg per person per year was also discussed. The PSMA, sources said, boycotted the meeting on the argument that it cannot participate in any such meeting without obtaining authentic statistics of sugarcane crop.

However, MoI documents show that it was unanimously agreed that while projecting annual sugar consumption figures it was prudent to take the peak month figures as standard consumption. The last three years' consumption was lower than projected, due to sugar consumption being price-elastic.

In the light of the decision of the SAB meeting, provinces have given the forecasts of sugarcane for the year 2011-12. In Khyber Pakhtunkhawa (KP), area under cultivation of sugarcane crop is 95,800 hectares. Estimates for 2011-12 sugar production is 275,655 tons, consumption 720,598 tons and shortfall of 444,943 tons. Punjab area under cultivation of sugarcane crop is 754,000 hectares and estimated sugarcane production in 2011-12 is 42.05 million tons. In Sindh, for year 2011-12, area under cultivation is 0.26 million hectares, sugarcane production is estimated at 10.778 million tons subject to confirmation after floodwater recedes in Sindh.

According to the MoI, the estimated sugar production for the year 2011-12 is 4.12 million tons, against the demand of 4.50 million tons, showing a gap of 0.38 million tons. Keeping in view the entire situation, the MoI has proposed that 0.4 million tons of sugar may be imported to maintain stability in the market and ensure sugar availability and affordability and to cater for intervention through USC in 2012. The Ministry argues that the arrival of the crop would ensure that hoarding and speculation is not resorted to and the market perception is one of adequate supply.

The PSMA Chairman said that there is no need to decide to import sugar prior to the end of crushing season as production is expected to be over and above the local requirements. Javed Kayani said any move to import sugar will be considered as 'a crime against the sugarcane growers', especially in Sindh. He added that there is no need to import sugar in the country. "We already have sufficient stocks and the current fall of Rs 10 per kg in sugar price at the end of the season clearly means stocks are more than required until the new crushing season starts".

He said that despite the fact that sugar industry has been bearing financial costs for the last ten months, there is no control on prices, and the market moves according to the phenomenon of supply and demand. Commenting on the ECC summary to import 400,000 tons of sugar in the country, Javed said that "it seems to be an exercise in futility and sheer waste of national resources when we are already expecting a bumper crop of sugarcane for the coming crushing season".

He said: "Sugar industry is likely to produce about 4.7 to 4.8 million tons of sugar, which would be surplus by 500,000 to 600,000 tons to the anticipated consumption". He said that policy makers should not take any decision to import at this stage as crushing is about to start next month and there is no point discussing this issue while the availability is in abundance. PSMA strongly suggests that GoP can actually build up the strategic buffer stocks next year from surplus stocks, and the ECC should defer this decision until production figures for the next crushing season are in place.

source: brecorder