The sugar price in the country may surge to at least Rs 80 per kilogram within a couple of months as the government remains reluctant to build up a strategic reserve. The country will face another shortage of sugar if the Economic Coordination Committee (ECC) does not handle the sugar issue immediately, sources in Pakistan Sugar Mills Association (PSMA) told Pakistan Today. Though the association has already demanded the procurement of existing sugar stocks with an increase in the ex-sugar mill price, no positive response from the concerned authorities has been received so far, they added.
The association has not only demanded that earlier procurement of at least 200,000 to 300,000 tonnes of sugar from the millers to facilitate payments to growers but also to avoid further sugar shortage in the country. With the lower strategic stocks, hoarders will receive a chance to hoard the sugar and trigger a jump in the existing price to at least Rs 80 per kg by July 2011, they claimed. However, sources in Trading Corporation of Pakistan (TCP) have determined that there are at least 400,000 tonnes of sugar being held in stock in the country out of the required strategic stock of 700,000 tonnes. Strategic reserves are necessary to meet any emergency in the country and a sufficient quantity was needed for timely off-loading in the market as and when necessary. Though the issue of sugar procurement from local millers was to have been raised in a recently held ECC meeting in Islamabad, the issue remained unaddressed, they claimed.
As ECC had earlier decided to avoid the import of sugar this year, the proposal to buy the heavily used commodity from local mills were likely to be discussed in the next meeting of ECC, sources indicated.
It is pertinent to note that the Ministry of Industries and Production (MoIP) has earlier urged the government to procure sugar from local mills through Utility Stores Corporation and TCP to build strategic reserves. The MoIP sought from PASMA clarification on a number of details including the outstanding payment position to sugarcane growers for 2009-10 and 2010-11 sugar crushing season; if PSMA’s proposal for purchase of sugar by the USC/TCP still stands; and PSMA’s views on the supply/ demand situation of sugar in the country.
Earlier, the PSMA, while calling upon the government to acquire at least 200,000 to 300,000 tonnes in sugar from millers to facilitate payments to growers, has informed the government that the members of the association were under tremendous pressure from growers to clear outstanding payments and the only way it could be expedited was through purchases by the government to build a strategic reserve with the TCP at the current ex-mill price of Rs 62-63, which they claimed was the lowest in the world. The association had also informed the concerned ministry and ECC that sugar output during this harvest had surpassed all previous estimates with Punjab producing 2.6 million tonnes, Sindh 1.3 million tonnes and in the case of Khyber-Pakhtunkhwa, 262,120 tonnes of sugar with total production standing at 4.1 million tonnes.
According to PASMA, around 44 million tonne of sugarcane had been crushed during this season and the total payment to be made to growers was around Rs 220 billion at the average procurement price of Rs 200 per 40 kg. Almost Rs 190 billion has already been paid to growers while an amount of Rs 30 billion remains outstanding.
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