ECC approves sugar export to ward off glut

ISLAMABAD: After lifting the almost entire sugarcane stocks, the government has allowed export of 100,000 tons of sugar to improve sugar industry’s cash flows and ward off a possible glut in the market that may further bring down the retail price.

A decision to this effect was taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet on Tuesday. It was presided over by Finance Minister Dr Abdul Hafeez Shaikh.

Sources said that following a demand made by the Pakistan Sugar Mills Association, the ministry concerned had proposed that export of 200,000 tons be allowed in view of substantial stocks.

The government banned sugar export in 2009 when domestic prices skyrocketed to over Rs80 per kg from around Rs40 per kg. The sugar industry has been asking the government to purchase sugar for strategic stocks for sale through the Utility Stores Corporation and allow the surplus to be exported.

When the government agreed to buy sugar for the strategic stocks, the industry wanted a price of Rs65 per kg when the wholesale price had declined to less than Rs49 per kg.

Following public criticism, the industry offered to reduce the price and the government purchased about 400,000 tons of sugar at Rs46.25 per kg.

Considering the request for export, the ECC in its meeting on January 20 formed a ministerial committee headed by Textiles Minister Makhdoom Shahabuddin for a detailed review of the situation.

The committee suggested export of 200,000 tons of sugar through the private sector.

The ECC was informed that carryover stocks from last year stood at 900,000 tons while the current season could yield around 4.5 to 5 million tons.

After accounting for domestic annual consumption of 4.2 million tons, the expected surplus was estimated at 1.5 million tons at the end of the current season.

In view of the expected surplus, the ECC allowed export 100,000 tons and directed the ministries concerned to finalise the modalities in this regard in coordination with the State Bank.

COTTON PROCUREMENT: The ECC rejected a request made by the Pakistan Cotton Ginners Association to Prime Minister Yousuf Raza Gilani for government intervention to procure one million bales of cotton lint at Rs6,500 per bale. Since the proposed transaction involved a government subsidy of Rs6.5 billion, the ministry of finance opposed the request.

The meeting was also informed that small cotton stocks of less than 10 per cent was lying with growers, a government intervention on political considerations would not be prudent for the cotton market and would be against the spirit of the policy.

The meeting was informed that the Karachi Cotton Association and All Pakistan Textile Mills Association had also opposed government intervention.

source: dawn