The government is to impose a ban on export of sugar in case price in the domestic market rises by 10 per cent; well informed sources in Commerce Ministry told Business Recorder. The consensus decision was taken by a committee headed by the Commerce Minister, Engineer Khurram Dastgir Khan, recently.
According to sources, the participants were informed that the State Bank of Pakistan has issued a circular for allocation of sugar export quota in compliance with the decision of ECC of the Cabinet. However, no quota has yet been allocated to sugar mills and consequently no exports have taken place.
However, wholesale price of sugar has increased by 8.4% (from Rs 50.50 per kg to Rs 54.75 per kg) after the ECC”s decision to allow the export of sugar though there has been no significant increase at retail level.
The committee felt that an increase in price at wholesale will inevitably result in price escalation at retail level also in due course. Further, in the international market, there is likely to be an increase in sugar price due to the reports of lower production of sugar in India, the second largest producer of sugar in the world.
Secretary Commerce, Shahzad Arbab stated that the committee may, as per its mandate assigned by the ECC, keep a close eye on price trends in the domestic market and the decision to export sugar may be reviewed accordingly.
Commerce Minister emphasised that the consumer interests must be protected and any increase in sugar price beyond a reasonable level of market fluctuation (say 10%) must lead to discontinuation of exports.
Secretary, Ministry of Industries & Production (MoIP), Arif Azim revealed that there was some misperception created due to the news items appearing in a section of media that MoI&P has disagreed with the stock position and expected availability of exportable surplus and opposed the decision to export sugar. He stated that according to the production estimates, there would be sufficient surplus stock of sugar available in the country to merit exports.
He further stated that the updated stock position and estimated production of sugar will be communicated to Ministry of Commerce and the MoI&P would issue a statement to the media on the stock position to ensure price stability in the domestic market.
Following decision of ECC of the Cabinet taken on December 31, 2015 was also presented to the participants of the meeting:
“The Economic Co-ordination Committee of the Cabinet noted the position of Sugarcane Price in the Province of Sindh presented by the Cabinet Division and directed the Ministries of Commerce and National Food Security and Research to ensure that notifications for the agreed price of Rs 180 per 40 kg are issued by the Provincial Government concerned.
The Committee emphasised that the cash support being provided by the Federal Government was subject to payment of the due price of Rs 180 per 40 kg to the farmers and directed the Ministries concerned to resolve any outstanding issues and report back to ECC in the next meeting in case any issues remain unresolved.”
Additional Secretary, Ministry of National Food Security & Research (MNFS&R). Dr Hashim conveyed that provincial governments fix price of sugarcane under Sugarcane Control Act 1950 and Ministry of Commerce or Ministry of National Food Security & Research would not be influential in this regard.
Further, the meeting was informed that for the crop year 2014-15, the cash support of Rs 10/kg on export of 0.65 MMT sugar was approved irrespective of difference in sugarcane price announced by provinces as Punjab & Khyber-Pakhtunkhawa announced Rs 180/40kg, whereas Sindh announced Rs 172/kg.
Additional Secretary, Finance, Noor Ahmad recommended that only those sugar mills may be provided cash support on export of sugar which pay Rs 180/40 kg for purchase of sugarcane as the spirit of the decision to provide cash support on sugar export is to compensate sugar industry due to increased cost of production on account of sugarcane support price of Rs 180/40 kg.
After detailed deliberations, it was unanimously agreed that: (i) Ministry of Commerce will submit a summary to the ECC with the proposal that the federal share of cash support on export of sugar, as decided by the ECC on December 7, 2015, would be provided only to those sugar mills which purchase sugarcane at a minimum price of Rs 180/40 kg from farmers; and (ii) the trend of sugar price in domestic market will be closely monitored and in case of increase of more than 10% in retail price of sugar, further export of sugar would be stopped.
ECC, in its meeting agreed to the proposal of the committee that federal government”s share of subsidy will be given only to those mills which would pay Rs 180 per 40 kg to growers.
Source: Business Recorder