Raw sugar import plan in jeopardy

The government’s raw sugar import plan is in jeopardy as Pakistan Sugar Mills Association (PSMA) has expressed its inability to import raw sugar due to higher prices in the international market. This was the outcome of almost two-hour long meeting of the Economic Co-ordination Committee panel on sugar presided over by Minister for Industries and Production, Mir Hazar Khan Bijarani, here on Tuesday.“Our raw sugar import plan is now dead as the commodity’s price is about 29 cents per pound which implies this is not feasible for Pakistan. The Association will import raw sugar probably in February or March,” said an official who attended the meeting.However, the panel decided to auction 50,000 tons of white sugar stocked with the Trading Corporation of Pakistan after every 10 days till the crushing season starts after formal approval of the ECC. The TCP has been directed to sell sugar to a party, which will offer higher prices in the tender. This decision is yet to be ratified by the ECC and the Cabinet. There are apprehensions that white sugar offloading plan approved by the committee may not serve the purpose as every tender can be won by one party.

“The TCP should auction its sugar to the lowest bidder over the average purchase price plus cost,” said a stakeholder. The Punjab and Khyber Pakhtoonkhwa had requested the federal government to offload 80,000 tons of TCP’s sugar through their mechanism, which was rejected by the meeting.According to sources the meeting directed the provincial governments to pick 100,000 tons of sugar from the TCP stocks allocated for Ramazan package. Presently, sugar stock with the TCP is about 280,000 tons and more sugar is reaching Karachi in days to come. When contacted, Pakistan Sugar Mills Association (PSMA) Chairman Javed Kiani told this scribe that white sugar offloading decision has been taken on his insistence to ease prices as mill owners are being accused of manipulating prices.

Official documents reveal that in order to involve the private sector, the ECC on the recommendation of a ministerial committee that consulted all stakeholders withdrew 25 percent custom duty on import of raw sugar by private sector, which was expected to help bring down the prices in the long run. Twenty thousand tons of raw sugar is reaching the country. The meeting discussed the USC intervention to supply sugar for lower income groups at Rs 55/kg is continuing throughout the country.The consumer protection forums are being activated to complement the efforts of the government to bring the sugar price down by eg voluntarily foregoing sugar for two days a week. One possibility may be to motivate consumers to boycott overpriced commodities or declare one/two days a week sweet less and in this regard the platform of consumer protection forums may be mobilised. The meeting also discussed sharing of work done on linking the price of sugarcane to sucrose content.

The committee was briefed on declaring the Cane Purchase Receipt (CPR) as a negotiable instrument like the cheque. There was a general consensus in the meeting that CPR being given to the growers should be treated as cheque. Sugar policy approved by the Cabinet agreed that CPR is to be declared as a negotiable instrument, however it has yet to be decided as to which legal form (cheque, bill of exchange, promissory note, etc) CPR will be transformed into.In the last meeting to finalise an implementation mechanism on CPR it was decided that all the stakeholders will forward recommendations/proposals regarding the above-mentioned issue which will serve as basis for further discussion. Minfa gave a presentation on propagating sugar from sugar beet and research on higher sucrose content varieties requiring less water.

According to a press release, Sugar Advisory Board (SAB) meeting was held here on Tuesday. The meeting was chaired by Mir Hazar Khan Bijarani, Federal Minister for Industries and Production and attended by Minister for Food and Agriculture, Minister for Petroleum and Natural Resources, Secretary Industries and Production, Additional Secretary Food and Agriculture, Additional Secretary Industries and Production, Chairman NFC, MD NFML, Secretary Agriculture Sindh and Secretary Food Punjab. Senior officers of the Finance Division and the Planning Commission and representatives of PSMA, sugar importers and growers’ representatives attended the meeting.

The meeting was given a detailed presentation by Cane Commissioner Minfa on the post-flood situation. It was informed that the sugar production in 2010-11 would be around 3.1 million tons. The crushing season was expected to start November 15 onwards. It was decided that beet sugar as already approved in the Sugar Policy 2009 be promoted and Minfa was to come up with concrete proposals in this regard.It was also decided that the MoIP would forward recommendations for deciding power tariff for sugar mills urgently and more uniformly to make it power generation from baggase more feasible than selling baggase to the Paper and Board Industry. It was decided that TCP will start off loading 50,000 tons of sugar every 10 days in the open market through tenders.

The total quantity to be offloaded would be 250,000 tons by middle of December while the remaining 400,000 tons would be kept for the USC interventions and as strategic reserves. The existing sugar imported and domestic stocks stood at approx. 500,000 tons which were sufficient till end November while 300,000 tons were under import to reach by end November and 100,000 tons by December-end.Punjab and Sindh provided progress reports on linking sugarcane price to sucrose content. The Association said that some mills were already equipped with proper labs. While Punjab had set up mobile units as well. It would encourage the propagation of higher sucrose content varieties while safeguarding the present level of protection given to the growers.

The meeting stressed a transparent methodology to determine the sucrose premium preferably through a third party mechanism. The State Bank of Pakistan would provide a template for Cane Purchase Receipt (CPR) in language and with provisions that complied with banking instrument requirements in two weeks in consultation with Pakistan Banks Association (PBA) so that it could be used in the current season as a negotiable instrument. The State Bank of Pakistan also reported that around 80,000 tons of white and 70,000 tons of raw sugar was under import by the private sector – Brecorder