LAHORE - The sugar millers have asked the government to also grant them subsidy on the pattern of neighbouring government of India, which has provided subsidy on sweetener exports to boost shipments amid a domestic glut.
PSMA Punjab chairman Riaz Qadeer Butt said that the Indian cabinet approved a $54 (Indian Rs3,333) per metric ton subsidy for exports, making Indian exports viable at about 16 cents a pound. The subsidy will have a negative impact on world prices and will distort the market and Pakistan will find it difficult to export its costly sugar. He said that though the World Trade Organization opposes all forms of export subsidies but India never considered these kinds of restrictions.
With a view to give liquidity to the mills and help them pay the remaining part of the cane arrears, the Pakistan government can provide subsidy on sugar export as it had decided to pay a subsidy of Rs1.75 on every kilogramme of sugar last year. It is to be noted that the Economic Coordination Committee (ECC) of the Cabinet last year had approved inland freight subsidy of Rs1.75 per kg for the export of 1.2 million tons of sugar. The move came in the wake of slow pace of sugar export and keeping in view the industry’s liquidity position that causes delay in paying dues to farmers.
Riaz Butt said that the Indian govt has increased this year subsidy by 67 percent more than the Rs2,000 previously proposed by its Food Ministry.
He also informed that India, the world’s biggest sugar producer after Brazil, has planned to subsidize as much as 4 million tons of sugar export in the next two years.
He asked the government to announce a complete and permanent mechanism for sugar export by fixing a limit. “Whenever the sugar production surpasses a particular limit, necessary for local needs, the sugar mills should export surplus stock without waiting for permission of government,” Riaz Qadeer Butt observed. He said that the long-term policies and permanent mechanism for sugar export will allow the millers to enhance their expertise and endeavour for foreign market, besides producing surplus sugar to earn precious foreign exchange. He said that millers usually fail to export the full quota of sugar, due to several complexities including inconsistent policies. Pakistan should also follow the Indian policy of facilitating sugar exporters to expedite the payments to growers. Pakistan Sugar Mills Association Punjab chairman blamed the authorities for inconsistent policies, which confused the millers as well as the exporters to decide its production target and export strategies. He suggested the authorities to keep strategic reserves of 0.5 million tons to ensure stability in prices, particularly during Ramazan.
He further said that sugar output in India is set to climb for the first time in three years as a subsidy for raw exports and abundant dam water spur farmers to increase planting. Production may gain 5 percent to 25 million metric tons in the harvesting season starting October 1.
He said total sugarcane production had been estimated at 5.17 million tons in 2013-14, of which 3.14 million tons will be produced in the Punjab, followed by Sindh of 1.73 million tons and Khyber Pakhtunkhwa of 0.3 million tons.