March 20, 2007	Tuesday	Safar 30, 1428

LAHORE, March 19: Punjab’s sugar millers want the government to double the existing duty of 15 per cent on the import of refined white sugar in order to block what they call possible dumping of Indian sweetener in Pakistan.

“India has produced a surplus of three million tons this year, which is causing problems in payments to sugarcane growers,” a sugar miller, who asked not to be named, told Dawn on Monday.

Quoting a report released by one of the biggest commodity trader in the world, BUNGE, from Geneva, he said: “As an interim relief the Indian government has doled out a survival package of Rs7.5bn for the industry. Out of this Rs3.5m would be utilised to create a buffer stock of 1.150 million tons while the remainder Rs4 billion is being offered to the industry as incentives like freight subsidy to facilitate exports of two million tons of sweetener.”

He claimed that Indian traders, encouraged by the incentives announced by their government on export of surplus sugar, were planning to “dump” huge quantities in Pakistan through Wagha.

He said the Indian traders had already begun giving lucrative offers to their Pakistani counterparts. “If India sugar is allowed to be imported, it will cost about Rs28.50 per kilo to local importers at the Lahore Railway Station, which would be detrimental to the local sugar industry.”

The miller said the local industry would not be able to compete with the imported Indian sweetener because it was already facing great difficulty in recovering its cost of production owing to declining rates in the domestic market.

The sugar industry says its current production cost worked out to be Rs32.50 per kilo (inclusive of sales tax and financial charges) because of lower sucrose recovery and expensive sugarcane.

“Our sucrose recovery has dropped to 7.5-8 per cent and the price of sugarcane jacked up to Rs80 a maund against the government fixed rate of Rs60 per 40-kg,” the miller said.

He said the government had fixed the ex-mill cost of production of sugar in Punjab at Rs31 per kilo based on 8.5 per cent sucrose recovery rate and Rs60 per maund price of sugarcane.

“However, the recovery rate has dropped to 7.5-8 per cent because of frost and the rates of sugarcane increased up to Rs80 per maund. Because of these factors, the cost of production works out to be Rs32.50 a kilo,” he said.

He said the mills were selling their product at lower than their production cost and incurring huge losses. “At present the sale of sugar has substantially slowed down and creating severe liquidity crunch for the mills,” he said.

“In this market scenario, the possible threat of dumping of sugar by Indians has spread a kind of panic in the local industry. The government should either revise the import tariff or place Indian sugar on the negative list to protect the local producers and farmers.”

An office-bearer of the Pakistan Sugar Mills Association (PSMA) told Dawn that the situation was extremely volatile as the imported sugar could completely annihilate the local industry.

“To add insult to the injury, the Trading Corporation of Pakistan (TCP) has offered 25,000 tons of sugar for sale while the crushing is still on. It is high time to take immediate remedial steps and import duty on refined white sugar raised and the TCP tender called off as it is against the agreement between the PSMA and the government,” he added.

He said it was critical for the government to take measures to avert the possible dumping of Indian sugar as well as to call off the TCP tender to facilitate payments to the growers.