December 19, 2003	Friday	Shawwal 24, 1424

KARACHI, Dec 18: The Trading Corporation of Pakistan has to sustain losses to the tune of Rs580 million on exports of 100,000 tons of white refined sugar purchased from the mills earlier this year.

“The high cost of production and depressed prices of white refined sugar in the world market resulted in higher losses than initially anticipated by the Corporation,” admitted TCP chairman Syed Masood Alam Rizvi in a Radio Pakistan programme, ‘Bil-Mushafa’, here on Thursday.

The TCP chairman disclosed that the operational losses initially calculated by the Corporation for the export of 100,000 tons of sugar was at Rs555 million, but this proved wrong as extremely lower prices in the world sugar market increased the losses by Rs25 million.

Responding to a question, he said on an average the TCP exported 100,000 tons of sugar in the range of $204 to $213 per ton, thereby resulting in a loss of Rs6,000 per ton for the Corporation.

In a short period of three months (February-April), the TCP chairman said, the Corporation did not only issued five tenders for the purchase of sugar from the mills, but also managed to export the commodity simultaneously.

He said around 23,000 tons of sugar was exported to Afghanistan through land route and the balance to Iran, Indonesia, Yemen and East Africa.

After the Economic Coordination Committee’s decision in October for lifting of 200,000 tons of sugar from millers, the TCP is almost in final stages of lifting around 100,000 tons of sugar from the mills from their last year’s stocks.

With regard to a balance of 100,000 tons, Mr Rizvi said these stocks would be lifted in January 2004, from those millers who have cleared growers’ outstanding dues and commenced new crushing season (2003-04) before November 30, as per the government directives.

In reply to another question the TCP chief said so far 85 per cent of the price had been paid by the Corporation to the millers against 100,000 tons and the balance would be paid after they replaced these stocks with new crop’s production.

He said it was agreed between the TCP and the millers that they would replace the old stocks purchased by the TCP in November with those from the new crop production. Therefore, the held amount of 15 per cent will be paid to the millers at the time of replacement.

In reply to a question, he said that these sugar stocks would be kept as buffer stocks till such time when the actual production figures for current crushing season became clear. In case there were higher production than domestic consumption, the government may then decide to export some of the quantity.

Mr Rizvi disclosed that a Rs4-billion credit line for the purchase of 200,000 tons of sugar had been arranged with two commercial banks — MCB and UBL — at a very low mark-up rate of 1.719 per cent.

He expressed the hope that this low mark-up would greatly help the Corporation in minimizing its losses in sugar, which was already sustaining huge losses owing to high domestic production cost incurred by the mills and falling sugar price in the world market.

Referring to the role of the TCP, he said the primary objective of the Corporation was to stabilize prices of such commodities like cotton, rice, sugar, etc., but it also worked as a tool for the government in government-to-government agreements in commodities.

Unlike in the past when the state trading was essential and such corporations were having a big role in looking after big deals on the behest of the state, but today their role has been reduced as new era of market based economy have started around the world. He said the TCP played a major role in stabilizing cotton prices in 1991-92, when there was a bumper cotton crop of over 12 million bales. Similarly, he said in 1999-2000, another big cotton crop of over 10.10 million bales was harvested and the TCP once again moved in as third players in the cotton economy to safeguard growers’ interest.

In order to stabilize phutti prices and keep them above the government’s fixed support price, the TCP chairman said that around 524,000 bales were lifted by the Corporation from the 1991-92 cotton crop.

Furthermore, he said when the country for the first time in its history harvested a bumper wheat crop of 22 million tons in 1999-2000, the Corporation was given a task to export surplus wheat, and as a result around four million tons were exported.

However, the government estimates for wheat consumption at 19.2 million for last year’s (2002-03) wheat crop fell short despite the fact that the same quantity was produced. “As a result of this, once again we have become wheat importing country because recently the ECC decided to import 0.5 million tons of wheat to meet the shortfall,” Mr Rizvi said.

The TCP chairman said the Corporation worked under the ministry of commerce and its job was to import or export when asked and it had no role in policymaking except to execute those decision taken at higher level of the ministry.