LAHORE - The sugar mills in the country have sought permission for the export of 0.5 million tons of the surplus sugar without any rebate in order to ensure timely payment to the farmers like the previous year when the industry made payments of over Rs 240 billion to the sugarcane growers.

In a letter written to Federal Commerce Minister Khurram Dastgir, PSMA Central Chairman Javed Kayani observed that the country’s demand of sugar is around 5 million tons and it would have a surplus in the current season. The export of surplus sugar should be allowed to save the industry as well as the farmers. Moreover, the international market is currently at a level where the industry can retrieve cost of sugarcane to make payments to farmers.

Javed Kayani said that country has an estimated stock of over one million tons as on 30th September. According to an ECC decision of 2006, a minimum of 500,000 tons of strategic reserve must be maintained through Trading Corporation of Pakistan, which can be utilized for open market intervention.

“With the commencement of crushing season 2016-17 we foresee a production of 5.5 million tons of sugar based on 70 million tons of sugarcane. With a carryover of 1.2 million tons it is expected the total available quantity will be 6.7 million tons and after consumption of almost 5 million tons in 2016-17 surplus will be almost 1.7 million tons. Further quantity may be allowed after the crushing season upon review of the production figures.”

Javed Kayani, expressing gratitude for lending support to industry by allowing export of sugar with rebate during the last two years, observed the decision had positive impacts including 100% timely payments to sugarcane growers and foreign exchange earnings of $ 132 million.

Moreover, following the permission of sugar export the area under sugarcane cultivation remained intact as a result of payments to farmers, besides keeping sugar price stable in the country.

The government is always apprehensive that price of sugar would go up in the local market if it is exported, but it does not realize that the surplus cannot be consumed by the domestic market. Consequently, growers’ payments also remain outstanding because of erratic policies of the government, he added.

On the issue of support price, Javed Kayani said the government should always consider the prevailing market price of sugar while fixing the support price so that the industry remains viable to survive. Higher support price of sugarcane and lower prices of sugar have adversely been affecting the sugar industry; resultantly a number of sugar mills have gone bankrupt and sold their units.

Regarding past two years export rebate, he made it clear that during the last four years, support price was higher, and it was impossible to export without seeking a subsidy from the government since higher support price also resulted in more cultivation of sugarcane. The industry was obliged to crush the entire sugarcane crop. Therefore, it was justified to ask for rebate. All allegations of getting an undue favour are farcical, he added.

He said the export rebate is meant for payment to sugarcane growers. There was a gap of Rs10-15 per kg between our cost of production and what the industry could retrieve by exporting in the international market which was at around $400 per ton at that time.

He said around 2 billion rupees are still unpaid against this year’s export rebate by the federal as well as the provincial governments. In addition, 2.6 billion is payable to industry from TDAP for the last four years against inland freight subsidy that is being delayed, while the sugar industry is blamed for delays in payments to the growers.