ISLAMABAD:
Pakistan Sugar Mills Association (PSMA) on Saturday announced the beginning of new sugarcane crushing season from November 21 to ensure availability of sufficient stocks despite government’s permission for export of an additional 500,000 metric tons.
Even after exports, the surplus sugar would cover more than one month of domestic consumption, said a spokesman for the PSMA – the representative body of influential sugar millers.
The spokesman said that as per a precondition for sugar export, “all sugar mills will start crushing season from November 21, 2024. Hence, sugar production of 10 days of November will also become available”.
The Express Tribune reported on Saturday that the government had allowed export of an additional 500,000 metric tons of sugar on the basis of massively manipulated figures of available stocks and consumption patterns.
Federal Minister for Industries Rana Tanveer Hussain told The Express Tribune that mills had given an undertaking that subject to the permission for export of 500,000 metric tons, they would start crushing from November 21.
However, the PSMA’s undertaking showed that the pledge was contingent upon two conditions – permission for export of 500,000 metric tons and allowing further exports based on November 1 stocks.
“PSMA undertakes to start the crushing season with effect from November 21, 2024 subject to allowing export of 500,000 MT of sugar by the government and holding of next Sugar Advisory Board (SAB) meeting on November 1, as agreed in a SAB meeting, to allow further export of declared surplus on that date. Sugar surplus at that time is estimated to be between 300,000 and 500,000 tonnes,” the association stated.
This suggests that the crushing commitment is subject to more exports, to be determined by SAB on November 1.
The PSMA spokesman said that the federal government was previously taking two months of sugar consumption as strategic reserves while SAB decided that in view of the approaching crushing season and the next bumper sugarcane crop, the country would have surplus stocks next year as well so one month of stocks were sufficient.
“Because of a conservative approach, the industry was not given export permission timely, which caused serious liquidity issues due to which a few member mills had small amounts payable to cane growers,” the PSMA said.
It added that at the end of September 2024, the industry had unsold stocks of approximately Rs300 billion, which were pledged with banks, and the industry was finding it difficult to adjust credit lines, which may cause problems in arranging fresh credit in the next crushing season.
Minister for Information Attaullah Tarar said on Saturday that Prime Minister Shehbaz Sharif had nothing to do with the sugar export permission.
However, it is to be seen whether he will chair the cabinet meeting where the ECC’s decision on export of 500,000 metric tons will be ratified or he will recuse himself to avoid conflict of interest.
The ECC on Friday took the export decision on the basis of two self-contradictory summaries, one dated September 18 and the other dated October 10. Both summaries had been signed by Industries Secretary Saif Anjum.
There was over 20% variation in consumption numbers between the September 18 and October 10 summaries. This paved the way for the export permission.
According to the ECC’s September 18 summary, average consumption during the first eight and a half months of the current crushing year was 564,353 tons per month.
Surprisingly, Industries Secretary Saif Anjum signed another summary on October 10, which the ECC approved on Friday, having numbers contradicting the old summary.
The committee was told on Friday that there was an agreement among provincial cane commissioners, the Federal Board of Revenue (FBR) and PSMA that total consumption during the last 10 months (till the end of September) was 5.456 million tons, or 545,060 tons per month. It estimated monthly consumption at 450,000 tons for the remaining period.
The bureaucracy’s September 20 estimates for sugar consumption were wrong, said Haroon Akhtar Khan, a sugar miller and a former minister for revenue. He was speaking at the Express News show – The Review.
Khan said that since the crushing season was hardly 40 days away, it was immaterial to discuss which numbers were correct.
The PSMA spokesman said that almost 50% of total available sugar, ie, 7.545 million metric tons, had been sold much below its cost of production, causing massive losses to the industry.
It was agreed with the government since the first export permission that ex-mill sugar prices would not exceed Rs140 per kg but due to huge surplus stocks, the prices have remained between Rs120 and Rs125 per kg, the spokesman added.
However, official documents showed that given the reduced sugar prices, the commerce ministry recommended that the ECC should also lower the benchmark price for retail market to Rs137.51 per kg, from roughly Rs145 per kg.
The industries ministry opposed it on the ground that the current prices were “abnormally low”.
PSMA said “it appreciates the federal government measures taken to curb smuggling of sugar since September 2023 after which there have been no leakages, resulting in availability of surplus sugar for export purposes, earning much-needed foreign exchange for the national exchequer instead of going to the pockets of smugglers”.
