ISLAMABAD: Prime Minister Shehbaz Sharif has formed an Inter-Ministerial Committee (IMC) to examine regional models for the import of raw sugar for re-export of refined sugar, sources in the Commerce Ministry told Business Recorder.
The committee will be chaired by the Minister for National Food Security and Research and will include the Minister for Commerce, Minister for Petroleum, SAPM on Industries and Production, Secretary Industries, Jahangir Khan Tareen, Member EAC, two representatives from the Pakistan Sugar Mills Association (PSMA), and the Secretary of National Food Security and Research. The committee has been tasked with developing a strategy to address the ongoing sugar pricing issue.
The Terms of Reference (ToRs) of the committee are as follows;
(i) to study regional models for import of raw sugar for re-export of refined sugar;
(ii) to develop a policy framework for import of raw sugar for refining and subsequent export, while safeguarding interests of local growers;
(iii) ascertain availability of surplus refining capacity in the country to operationalise import-cum-re-export framework;
(iv) projected foreign exchange earnings and possible impact on local prices of commodity, if any ; and
(v) any other issue ancillary to above. The committee shall submit its report within ten days.
Govt decides to import raw sugar
Background interactions with officials in the Commerce Ministry suggest that a controversial decision to export sugar at the beginning of the season, despite media reports and warnings from various concerned parties, has led to a sharp rise in sugar prices. Officials fear that prices will continue to escalate and spiral out of control.
“As is evident from advertisements by farmers, the sugar industry is allegedly calculating its cost of production based on the last week of sugarcane procurement. The industry’s claim of deducting sugarcane at the weighment stage due to poor quality has raised concerns. The cost should remain reasonable and to the industry’s benefit, with the price of sugar being sold at Rs. 140 ex-mill, as envisioned by the Prime Minister and confirmed by industry representatives,” sources noted.
Official sources also fear that the proposed import of raw sugar to reduce prices could have unintended consequences. The import process could be monopolized by large groups with the financial means to import, leaving only a few mills with sufficient bagasse to process the raw sugar. This would lead to the commodity being concentrated in the hands of a few mills, allowing them to manipulate the price and make substantial profits at the expense of other millers.
“There are also ongoing discussions about whether the government should directly import sugar and maintain reserves for open market intervention. When market prices surpass a certain threshold, the government could release sugar into the market,” sources added.
This is not the first time the sugar industry has failed to honor its commitments. A similar situation arose under the previous regime when government agencies were tasked with probing the price hike. At that time, only a few millers who had stockpiled sugar for export offloaded their quantities.
“It would be inappropriate to allow a select few to import raw sugar and manipulate prices further. Policymakers must ensure that no single section of the industry can monopolize the refining process. The quantity of sugar exported should have been limited in light of the anticipated shortfall,” the sources concluded.
