LAHORE – The sugar industry has asked the federal government to divert subsidy of around Rs 4 billion to the industry, presently being spent on sugar sale at utility stores, enabling the millers to export surplus sugar, as the international rates of sweetener have dropped significantly.

Pakistan Sugar Mills Association Punjab Chairman Riaz Qadeer Butt, talking to The Nation, observed that the government has been spending around Rs4 billion as subsidy to lower sugar prices to Rs42 per kg at Utility Store Corporation (USC), despite the fact that sugar rate is already low in open market.

“The subsidy is usually given when its market price is very high and commodity is very short. But in this scenario, provision of subsidy on sugar is wastage of taxpayers’ money. The government can divert this amount to industry as a rebate so that it could export 1.2 million tons white sweetener to earn foreign exchange and make timely payment to growers.”

Moreover our usual export of 5,000 tons to 10,000 tons white sweetener to Kyrgyzstan and Tajikistan via Afghanistan has also been halted due to heavy snow, he disclosed.

Riaz Butt pointed out that present permission of export remains no more beneficial for industry and we cannot earn foreign exchange without subsidy of the government, he said. He added that every country provides subsidy to its sugar exporters with a view to attract foreign exchange. Our government should also provide rebate of up to Rs 6 per kg on sugar so that millers could be able to export surplus stock, he demanded.

He claimed that sugar export has not been feasible for the millers due to very late decision of the government as the international market rates have dragged down to the domestic level of $518 per ton.

Though the State Bank of Pakistan, following the decision of the Economic Coordination Committee (ECC) of the Cabinet, has allowed domestic mills to export 5 million tons of sugar without any quota restriction, yet it is too late decision to earn some margin when rates at global market are constantly dropping, he said. 

PSMA Punjab chairman said that the prices of white sweetener at international market will further down because German government has announced subsidy on export of sugar to support its millers, which will also lead to decline in price of sugar further.

Riaz Qadeer Butt said that our exporters will take further time to export their stock as the government has lifted ban after a long time.

As they are not aware of world market norms and clientage chain they will take more time to seek information for marketing of their products. He blamed the government for inconsistent policies, which confused the millers as well as the exporters to decide its production target and export strategies.

He demanded the government to announce a complete and permanent mechanism for sugar export by fixing a limit. “Whenever the sugar production surpasses that particular limit, necessary for local needs, the sugar mills should export surplus stock without waiting for permission of government.

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,” Butt stated.

Replying to a question, he said that presently sugar mills are running at 60 to 70 per cent of their capacity as sugarcane is short.

Every sugar mill crushes in the range of 6,000 tons to 10,000 tons sugarcane daily but the availability of raw material is just 4,500 ton, increasing the cost of production of millers. As increase of sugarcane prices directly affects sugar prices and if per acre yield of sugarcane is increased then the farmers would be able to get more benefit and issue can be tackled with the increase in research, technology and yields of sugarcane.