Commerce Minister Khurram Dastgir Khan on Monday assured full support to Pakistan Sugar Mills Association (PSMA) on export of the commodity provided mills submit their cost sheets for a third party evaluation, sources close to the minister told Business Recorder.
“The minister has held a detailed meeting with a delegation of PSMA to discuss Ramazan availability and possible exports due to excess stocks. However, both sides failed to evolve consensus on the issue of export,” the sources added. PSMA delegation informed the minister that the federal government had fixed ex-mill price at Rs 45 per kg in 2009 when the price of sugarcane was at Rs 80 per 40-kg and urged the minister to fix the price at Rs 60 per kg as the price of sugarcane has increased to Rs 170 per 40-kg.
Unofficial reports suggest that the federal government will reduce the rate of Federal Excise Duty (FED) from 8 per cent to 6 percent per kg. The minister was told that four or five sugar mills have already been sold because of continued losses and if this practice continues, others will follow suit as they cannot afford to run at a loss.
According to the Sugarcane Act, mills are bound to continue crushing till sugarcane is available. PSMA maintains that the government should extend $40 per ton subsidy for the export of 0.5 million tons of sugar against which they will bring $300 million to Pakistan.
PSMA has requested a subsidy of Rs 4 per kg on export of surplus sugar from the country, as the crushing season was closed for the third consecutive year due to surplus domestic production India is also surplus in sugar and the Indian government has extended substantial export subsidy to its industry. Indian government is providing a subsidy of $54 per metric ton to their industry as well as Rs 6.6 billion interest free loans.
The sugar milling industry has closed the season with 11.37 million metric tons of surplus sugar. Out of more than one million metric tons, the PSMA has been requesting the government to allow them to export half the surplus sugar, and for Trading Corporation of Pakistan to purchase the remaining surplus as buffer stocks. Commerce Ministry had submitted a summary to the ECC for export of surplus 0.5 million tons sugar which was firmed up at a recent meeting of Sugar Advisory Board (SAB) presided over by Additional Secretary MoI&P, Khizar Hayat Khan who had recommended further export of 0.5 million tons of sugar as the country will have 0.8 million tons surplus sugar due to a bumper crop after Cane Commissioner Punjab and Cane Commissioner Sindh confirmed total sugar production figures.