Punjab warns against sugar export, surge in prices

ISLAMABAD: The Punjab Government has contested the May 16 decision of the Economic Coordination Committee (ECC) to export 400,000 tons of sugar, which was taken under the pressure of the sugar cartel said the overall prices of the commodity would shoot up before and during the forthcoming holy month of Ramadan.

A letter written by Punjab Chief Secretary Nasir Mehmood Khosa to the finance, cabinet, commerce, industries and national food security and research secretaries, a copy of which is available with The News, knocked down the main argument ñ enabling sugar mills to make payments to growers ñ behind allowing the export. As far as payment to growers is concerned, 98.36% has been made in Punjab and more than 99% would be made by the end of the current month, the letter said. It said that it would have been appropriate if the provinces had been consulted before taking this decision, as the export of 400,000 tons of sugar will affect the overall prices of sugar especially before and during the month of Ramadan.

The Punjab government requested federal authorities to review the decision in consultation with the provinces. Since the provincial government was not formally conveyed the ECC decision, the letter quoted press reports and said the ECC has allowed export of 400,000 tons of sugar; that while taking this decision, it took inputs from the industries ministry and Trading Corporation of Pakistan (TCP) and was convinced that there was a satisfactory situation of sugar stocks; and that sugar export would ease the liquidity issues of sugar mills and result in payment of remaining liabilities to the cane growers.

The chief secretary referred to his previous correspondence in which the Punjab government had requested that any decision pertaining to sugar export may only be taken in consultation with the provinces. Such consultation is required for an overall assessment of the domestic requirement as well as the issue of local prices; he noted and pointed out that the present retail price of sugar was stable between Rs52 to Rs55 per kg. Officials said this year the sugar production was less than before.

They said that instead of exporting the commodity when it was domestically needed, the sugar mills should have been asked to manage funds from the banks to pay the growers as they easily do this by pledging their stocks. There was no point in unnecessarily facilitating the cartel, they said and added that some of them were sitting even in the ECC that took the present decision. The powerful sugar industry managed to secure ECC approval, and the industries ministry sponsored the summary to the effect. Nobody in the ECC even discussed the current sugar stock and projected situation in the coming months, officials said.

According to industry experts, at the moment sugar export was not a feasible option, and the government should have waited for a few more months to get exact data of cane production for the next year. They said the government should have taken a decision after reviewing the volatile weather situation in the region as next year demand for import of the commodity could dramatically go up.

Currently, the TCP has stocks of 0.487 million tons of sugar and an additional 2,000 tons of the last year. The government has already facilitated the sugar cartel by lifting a three-year ban on sugar export in January by permitting it to sell 100,000 tons sugar at Rs60 per kg. The TCP also procured 0.478 million tons of sugar from the cartel in same month which helped monetize the commodity to the tune of Rs22 billion.

SOURCE: thenews