ISLAMABAD – The government has replaced Petroleum Minister Dr. Musadik Malik with Deputy Prime Minister and Foreign Minister Senator Ishaq Dar as the Chairman of the Sugar Monitoring Committee. This decision reportedly stems from concerns about Dr. Malik’s approach during committee meetings, where he was perceived as too stringent in his decision-making.
Reasons for the Change
Sources within the Ministry of Industries and Production indicated that Dr. Malik’s behavior in recent meetings was deemed “inappropriate” and was brought to the attention of senior government officials. The shift to Senator Ishaq Dar is believed to signal a move towards more lenient decision-making in managing the sugar industry.
Recent Developments in Sugar Policy
On October 11, 2024, the Industries and Production Division provided a briefing to the Economic Coordination Committee (ECC) regarding the Sugar Advisory Board (SAB) meeting held on October 8, 2024. The SAB reviewed current sugar stocks and consumption patterns for the 2023-24 crushing year, confirming that existing stocks totaled 2.054 million metric tons as of September 30, 2024. The total consumption over the last ten months was reported at 5.456 million metric tons, excluding exports.
The committee projected that the expected off-take in the coming months would be approximately 0.900 million metric tons. Considering the anticipated export of 0.140 million metric tons, this would leave a remaining stock of about 1.014 million metric tons by November 30, 2024. After setting aside a month’s supply as a strategic reserve, a surplus of approximately 0.564 million metric tons would be available for export.
Recommendations for Sugar Exports
The SAB recommended permitting an additional export of 0.500 million metric tons of sugar, contingent upon several conditions:
- Production Commitment: The Pakistan Sugar Mills Association (PSMA) must provide an assurance that mills will commence production by November 21, 2024. Any mill failing to comply will have its export quota revoked.
- Price Controls: The ex-mill price of sugar must remain capped at Rs.140 per kilogram.
- Benchmark Pricing: The benchmark retail price will be based on the Sensitive Price Index (SPI) from June 13, 2024, plus an additional margin of Rs.2.00 per kilogram.
- Monitoring: The SAB will monitor ex-mill and retail prices weekly. If prices exceed the established benchmark, export permissions will be revoked immediately.
- Payment to Growers: Export proceeds must be utilized first to settle outstanding payments to sugar cane growers; non-compliance will result in the revocation of export quotas.
- Timely Shipment: Export consignments must be shipped within ninety days of quota allocation.
- Banking Provisions: Export proceeds for Afghanistan must be received in advance through banking channels, while exports to other destinations may proceed via Letters of Credit (LCs).
Quota Allocation and Monitoring
The export quota will be allocated among provinces based on current production levels. Provincial Cane Commissioners will distribute quotas within seven days of the Ministry of Commerce’s notification. Compliance with pricing and payment to growers will be enforced by provincial authorities, who must report weekly to the SAB. The State Bank of Pakistan is tasked with providing bi-weekly updates on sugar exports.
The ECC further stipulated that the SAB holds the authority to revoke export permissions to maintain market stability or in response to any violations of the outlined conditions. Additionally, no subsidies will be offered to exporters by either federal or provincial governments.
Conclusion
The ECC’s recommendations, including the appointment of Senator Ishaq Dar as Chairman of the Sugar Monitoring Committee, have been approved by the federal cabinet through a summary circulated for quick approval. The Industries and Production Division is also directed to outline the timeline and process for sugar exports in future ECC meetings.
