ABDUL RASHEED AZAD
ISLAMABAD: The all Pakistan Sugar Mills Association (PSMA) has proposed to the government to import up to 300,000 tons of sugar as strategic reserves for August to October.
Sugar industry representatives suggested that the government should at least import a quantity of 300,000 tons (August 10-15, 50,000 tons, August 25-30, 50,000 tons, and a similar quantity and arrival schedule of sugar in September and October) as strategic reserve for intervention in the market to stabilise the sugar rate, if the price spirals.
The suggestion was given in a meeting of the Sugar Advisory Board (SAB) meeting held here on July 22 under the chairmanship of Federal Minister for Industries and Production Hammad Azhar.
The Sugar Industries’ side was represented by Aslam Farooq, Zaka Ashraf, Iskander Khan, and Javed Kayani.
The meeting was informed that currently there was about 1.6 million tons of sugar in stocks, which tentatively covered requirement for about 3.5 months.
The minister asked for review of stock position and made a comparison with the figures given in the last SAB meeting, which was held in May.
The figures were at variance as reported by cane commissioner of Punjab, and which were not actually physically verified.
Most of the mills stocks given in May were actually the production numbers of those mills, and hence, the stocks were not correctly reported by the Punjab government. It was suggested to the government to only take figure of the sugar quantity delivered/outgate by the mill, so that the exact inventory position could be reported and evaluated.
It was further suggested by the industry representatives to re-verify the stocks, so that correct figures could be ascertained.
The minister directed the Cane Commissioners to report stocks with accuracy to avoid such an ambiguity, so that correct decisions could be taken based on actual numbers.
The minister was of the view that the government had already allowed 300,000 tons of sugar duty-free to be imported by the private sector also but no quantity has been contracted as yet.
To his query, the industry argued that importers have lost confidence in view of fixation of price by the local administration, harassment of dealers and brokers, and general uncertainty because of government intervention have eroded the confidence and dissuaded the importers and investors who could bridge the gap to cover the shortfall to keep prices stable.
It was also brought to the notice of the minister that import from Khaleej costs Rs91.53/kg in containers, and Rs89.46 break bulk basis, and the landed cost from Brazil is Rs86.098/kg in containers and Rs84.031 in break bulk.
The sailing time from Khaleej is lower than Brazil.
The minister himself gave a costing of imported sugar worked out by the government at Rs84/kg.
The industry also suggested allowing import of 200,000 to 300,000 tons of raw sugar for export to China.
The minister was requested to check with the Chinese ambassador about the possibility of importing sugar from Pakistan.
The minister asked the industry about the next crushing season to which the industry representatives expressed serious apprehensions about the ongoing audit of the sugar mills for the last five years by the FBR and possible investigation of the NAB, which had made banks nervous to extend working capital limits to the industry.
There is an atmosphere of utter uncertainty and under the circumstances it would be difficult to manage the crushing season in the absence of working capital or with reduced cash finance facility against the pledge of sugar.
However, the minister expressed concern about the start-up date to which he was assured that between 15-20 November, new crushing season would hopefully commence, however, confidence building measures are necessary for the stakeholders.
Growers’ representatives were also present and expressed their concern about the coming crop, which was about 20 percent better than the preceding crushing season.
They expressed satisfaction in general that the sugarcane crop remained very remunerative and lucrative for them during the season 2019-2020.
It is pertinent to note that sugarcane prices remained very high and the industry averaged around 240-250/kg, and at the end of the season some mills paid as high as 350/40kg. That is why the cost of producing sugar ended up higher than anticipated.
However, growers made a complaint of two mills, who were not unable to clear their dues as yet to which the minister directed the concerned cane commissioner to redress the grievance of the growers.