Federal government on Thursday expressed serious concern over unwarranted increase in price of sugar in the domestic market despite a downward trend in international sugar prices and availability of sufficient stocks. An inter-ministerial committee meeting presided by Minister for Commerce, Engineer Khurram Dastgir Khan noted that the sugar industry has earned similar profit on sale of sugar in domestic market which they expected from export.
Sugars millers have exported 21,133 MT of sugar since the ECC extended permission to export 0.5 million tons of sugar in December last year. An official told Business Recorder, the estimated production cost of sugar is Rs 50/ kg at sugarcane price of Rs 180/ 40kg. The sales tax on sugar is Rs 4/kg. However, export is zero rated and sales tax refund is claimed by the sugar exporters against sale tax paid on inputs.
Addressing the committee, Minister for Commerce, who was said to be hesitant to accept the responsibility of chairmanship of the committee, stated that while formulating pro-export policies, the Government would safeguard the interests of all stakeholders especially the consumers and farmers.
According to an official statement, Economic Co-ordination Committee (ECC) of the Cabinet while allowing export of 500,000 tons surplus stock of sugar had asked an inter-ministerial committee on sugar constituted by the Prime Minister to review every month the sugar stock/export situation.
The second monthly meeting of the Committee was held Thursday with Commerce Minister in the chair. Secretary Commerce, Secretary Industries & Production, Additional Secretary Finance and representative of Ministry of National Food Security and Research attended the meeting.
Secretary Industries said that a stock of 2.25 million metric tons of sugar is currently available in the country and the crushing season will continue till mid-April further adding to the available domestic stock. Therefore, there was abundant stock of sugar available in the country whereas monthly consumption is 0.4 million metric tons.
The inter-ministerial Committee in its first meeting held in January had decided to recommend discontinuation of sugar export, if the prices in domestic market increased by more than 10 per cent. The Committee in its second meeting was informed that the retail price of sugar in domestic market has increased from Rs 57.20 per Kg on December 10, 2015 to Rs 62.07 per Kg.
“As the price increase is less than 10 percent, the threshold to discontinue the permission for export has not yet been crossed,” the official statement quoted the committee as saying. However, the committee observed that as there are sufficient surplus stocks in the country and international sugar prices are declining, the current price increase was inexplicable.
With more production of sugar coming in the channel, prices should go back to the previous levels during the coming days. Commerce Minister tasked the committee to carefully monitor the domestic prices and stock position of sugar to avoid any speculation and abnormal changes in the market, particularly in the run-up to and during Ramazan.
Ministry of National Food Security and Research has estimated 65.44 million tons production of sugarcane for season 2015-16. On average, 80 per cent of the sugarcane produced in the country is crushed by sugar mills to produce sugar at the recovery rate of 9.8 per cent. The estimated sugar production in 2015-16 is 5.13 million tons.
Source: Business Recorder