Sugar industry pocketing double profits

PSMA chief defends sugar industry; says subsidy
can be cut in proportion to increased prices 

ISLAMABAD: Sugar tycoons are pocketing profits both at domestic and international markets as they are pressing hard to convince the government to extend the deadline for exporting 500,000 tons sugar by getting subsidy on per kg basis beyond March 31 deadline. The ECC had granted permission to export 0.5 million tons sugar till March 31, 2016, for getting subsidy at the cost of taxpayers’ money to the tune of Rs13 per kg. 

However, when contacted Pakistan Sugar Mills Association (PSMA) Chairman Iskandar Khan on Saturday, he defended sugar industry by stating that the government fixed sugarcane price at Rs180 per 40kg which resulted into sugar production at Rs50 per kg cost. If you add taxes of Rs4, its price will go up to Rs 54 per kg. The production of sugar mills stands at Rs 8 to 10 so the sugar cost goes up in the range of Rs62 to Rs64 per kg in domestic market. He asked the government that it should also fix factory price and retail price of sugar if it could not come out from fixing sugarcane prices for farmers.

He said that there was need to link  sugarcane price to recovery. When asked about their demand for increasing deadline for exporting 0.5 million tons sugar by two to three months, he said that the government approved export of sugar through ECC in November 2015 but granted permission by end January 2016. Through Karachi port, there is no capacity to export beyond 100,000 to 150,000 tons, so PSMA is asking for providing extension in it.

When asked for justification of Rs13 per kg subsidy on export of sugar at a time when the prices are escalating in the international market, he said that the subsidy amount should be reduced proportionately in accordance with increased prices of sweetener in international market.

However, the sources said that so far the sugar industry has obtained orders to export around 250,000 tons or 50 percent of the allowed limit, so they have already started lobbying to convince the government for extending the deadline enabling them to avail this subsidy on exporting sugar, at a time, when the prices in international market went up by $50 per metric tons in recent weeks.

When the ECC had allowed exporting of sugar its price in international market stood at around $414 per metric tons which now gone up by $50 per metric tons and existing price stood at over $460 per metric tons. “So sugar industry is making money from both hands,” said the sources.

However, according to the Ministry of Commerce statement issued here on Friday night, stating that third monthly meeting of the Inter-Ministerial Committee, headed by the Minister for Commerce, Engr Khurram Dastgir Khan, was held on  March 25, 2016, in the Committee Room of the Ministry of Commerce. The committee reviewed the position of sugar exports, available stocks and price trend in domestic market.

The Economic Coordination Committee of the Cabinet, while allowing export of surplus stock of sugar in December 2015, had tasked an inter-ministerial committee on sugar, constituted by the prime minister to review sugar stock/export situation every month. Secretaries of ministries of Commerce, National Food Security and Research and representatives of ministries of Industries & Production, and Finance attended the meeting.

The meeting was informed that price of sugar in the domestic market remained stable over the last month. The national average retail price of sugar, as reported in the Sensitive Price Index, was Rs62.51 during the week ending on  March 17,2016. Moreover, it was informed that 198,387mt of sugar has been exported since the ECC granted permission to export sugar.

The representative of the Ministry of Industries informed that stock of 3.55 million metric tons of sugar is currently available in the country which would be sufficient for the domestic consumption till  November 30, 2016. Therefore, the availability position of sugar stocks during Ramazan and beyond was satisfactory.

The commerce minister emphasised that while encouraging exports of the country, the interests of all stakeholders, including farmers and consumers, must be safeguarded.