ISLAMABAD, Nov 30: The caretaker government on Friday removed a 15 per cent duty on sugar export and increased the duty on its import to help the sugar industry reduce surplus stocks.
The decision was taken at the first meeting of the economic coordination committee (ECC) under the caretaker cabinet.
In May, a decision to allow the export of 500,000 tons of wheat had caused a steep rise in prices at home, leading to the suspension of exports. The government ended up importing one million tons of wheat at more than twice the export price — 440 dollars per ton, as against 200 dollars.
Dr Ashfaq Hasan Khan, economic adviser to the ministry of finance, said the ECC meeting had decided to increase duty on import of sugar from 15 per cent to 25 per cent and remove 15 per cent duty on sugar export.
He told journalists that the country had a record sugarcane production of 62 million tons enough to produce 4.3-4.5 million tons of sugar. Carryover stocks of 528,000 tons had brought about a surplus, he claimed.
He said that after accounting for 4.2 million tons of domestic requirement at a rate of 350,000 ton per month, 0.5-0.7 million tons of sugar would be surplus during the current season.
On top of that, he said, the provincial governments fixed support price of Rs67 per 40 kg in Sindh, Rs60 in Punjab and Rs65 in the NWFP which would bring sugar prices below Rs31 per kg and would be unbearable for the sugar industry.
Moreover, the Trading Corporation of Pakistan (TCP) had been asked to increase its strategic reserves to 500,000 tons instead of an earlier decision of 400,000 tons for market interventions. Currently TCP had stocks of about 186,000 tons. The ECC also directed the State Bank of Pakistan to ask the commercial banks to ensure working capital for the sugar mills till the end of crushing season.
Dr Khan said the ECC also directed the Punjab and Sindh governments to increase releases to the flour mills by an additional 2,000 tons and 1,500 tons respectively from the existing 16,000 tons and 6,500 tons to improve the supply situation and check prices.
He said arrangements had been made to complete the import process of 746,000 tons of wheat by the end of January and the provinces would be given additional quantities of about 800,000 to replenish their stocks.
He said there would be no restriction on inter-provincial wheat movement, but the provincial governments had been directed to monitor the wheat movement.
He said the ECC had advised the SBP to direct commercial banks to ensure loans extended to investors for commodity operations were not rolled over when these become due so that such elements do not indulge in hoarding and manipulating wheat prices.
The ECC also directed the provincial food departments to assess wheat stocks available with the private sector and take action against those holding stocks without authorization. The meeting also asked the ministry of interior to keep a close watch on the Pakistan-Iran and Pakistan-India borders to control the smuggling of wheat.
