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Ukrainian Grain & Oilseed Market

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Pakistan. White sugar import: PSMA proposal to halt TCP plan rejected

18.08.2010 11:59 "Agro Perspectiva" (Kyiv) — The government on Monday rejected Pakistan Sugar Mills Association’s proposal to halt Trading Corporation of Pakistan’s approved white sugar import plan. This was the outcome of a meeting between sugar mill owners and the ministerial committee, constituted by the Economic Co-ordination Committee of the Cabinet (ECC) in its meeting on July 29, 2010. The meeting was presided over by Finance Minister Abdul Hafeez Sheikh and Industries and Production Minister Mir Hazar Khan Bijarani was the convenor. The committee’s Terms of Reference (ToRs) were as follows: (i) To review and critically examine the availability of sugar and stock position up to December 2010 and beyond; (ii) to examine and make specific recommendations after meeting the sugar millers for import of raw sugar to meet the future demand; (iii) to encourage and suggest measures to involve private sector in import on sugar; and (iv) to submit its report to the ECC within 10 days. «PSMA made a concerted effort to sabotage the TCP’s approved sugar import plan by offering raw sugar import in early November which was factually far beyond the ground realities,» sources added. Mill owners, sources said, wanted that at least 0.5 million tons contracted white sugar should not be imported as per schedule that would have allowed them to rake in windfall profits. At one stage the committee showed willingness to allow sugar millers to import 0.2 million tons raw sugar, however, when it was revealed that it may take three months after opening of LC, the committee rejected the plan with the observation that the matter will be reconsidered in December, sources said. PSMA, sources said, also misled the meeting about the stock position. One month before their declared stock was one million tons and on August 16, 2010 it was the same. «One of the participants raised this issue and inquired how the stock was exactly the same after one month, given the monthly consumption of 0.35 million tons,» sources added. Sources said the Finance Ministry’s representative expressed inability to provide funds to open new LCs to import sugar but the Minister for Industries and Production, who was in charge of the meeting observed that the Finance Ministry must honour the commitment made by the Secretary Finance in the ECC meeting. TCP required Rs 22.5 billion funding to open sugar LCs. According to official statement, the meeting was informed that raw sugar could either be imported at the beginning or at the end of the crushing season. As of today it was too late to source raw sugar at the beginning of the crushing season since it would take 80 days to import sugar from Brazil. The best option would be to make a decision in forthcoming December about the quantum of raw sugar import at the end of the crushing season when effects of floods on sugarcane crop were clearer. The floods have damaged some sugarcane crops while other crops may have greater sucrose recovery so the final sugar yield may stay unaffected. The final decisions relating to raw sugar import will be made in the ECC. It was reiterated that from next season, TCP will not be used to import sugar. It was felt that the private sector would require confidence in this decision to fill the gaps in future as the import duty is zero on white sugar since 2006. The meeting agreed to continue with the sugar procurement as decided and to ensure that sugar is available at reasonable rates during the holy month of Ramazan. Moreover it was not possible for new sugar to enter the market before 1st December 2010 and supplement the old stocks and as such 1.2 million tons of sugar import will continue as planned. The TCP Chairman clarified that 349,188 tons white sugar has reached the country. Further 81,000 MT will arrive in August and 74,000 MT would arrive in September while 30,000 MT would reach in October and November. The meeting expressed satisfaction over the sugar reserves that were comfortably positioned for Ramazan. When contacted, the PSMA Chairman Iskandar Khan said that PSMA proposed that the government should halt white sugar import which is scheduled for January and allow PSMA to import raw sugar to meet the next year’s shortage. «We have urged the government to stop sugar import planned to reach in January and allow mills to import raw sugar to crush in November. The government can save $240 per ton by accepting our proposal,» he added. In reply to another question, he said stock statistics are provided by the MoI&P and not the sugar mill owners of PSMA. The government expects 3.8 million tons sugar production next year as the production is 25 percent higher than the previous year. However, 10 percent sugarcane crop has been damaged due to flash floods, which implies the sugarcane growth will be around 15 percent. The meeting was attended by the Federal Ministers for Food and Agriculture, Science and Technology, Petroleum and Natural Resources, Commerce, Deputy Chairman Planning Commission, Secretary Industries, Commerce, Minfa, representatives of the Federal Board of Revenue, Ministry of Finance, Cane Commissioner Minfa, senior representative of the State Bank of Pakistan, TCP Chairman, USC Managing Director and representatives of PSMA and the provincial chapters.

Agro Perspectiva

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