ISLAMABAD: Under pressure from millers, the government allowed the export of 150,000 tonnes of sugar on Monday despite the high domestic retail prices hovering around Rs160 per kg.

The decision came just two days before the national budget at the behest of sugar mill owners demanding to export their surplus production. These millers are part of the Pakistan Muslim League-N coalition government.

This will be the coalition government’s second decision to allow sugar exports, which resulted in increased retail prices, further fuelling inflation.

However, it is interesting to note that at the time the Ministry of Industries issued the press release announcing the decision about the Sugar Advisory Board (SAB) decision, Commerce Minister Jam Kamal denied on the floor of the National Assembly that any such decision had been made.

Commerce minister informs National Assembly no decision has been made

Responding to a question asked by PPP’s Agha Rafiullah, the commerce minister termed such reports as a rumour.

The PPP lawmaker had asked the minister to clarify the reports that the government had allowed the sugar export and expressed the fear that the country might face a situation similar to one it recently faced due to a similar decision by the caretaker government to allow the import of wheat at a time when the country had the commodity in surplus.

The commerce minister informed the lower house that no decision was made on sugar export and that the concerned member was referring to rumours.

The minister stated that the SAB is the first forum to make decisions about sugar exports, which must be approved by the Economic Coordination Committee (ECC) of the Cabinet.

In FY23, the government led by the PML-N allowed the export of a substantial quantity of 212,896 tonnes of sugar in three months.

This move was reportedly made to benefit members of the Pakistan People’s Party (PPP) and the PML-N members.

Due to large-scale exports, the sugar’s average retail price rose to Rs136 per kg in May 2023 and then to Rs195 per kg in September 2023. Before the cane-crushing season began, the sweetener price surged to Rs230 per kg in major cities.

An official announcement from the Ministry of Industry said that the government conditionally allowed the export of 150,000 tonnes of sugar. The decision was reached in a meeting of SAB chaired by Federal Minister for Industries and Production Rana Tanveer Hussain.

The meeting was also attended by the federal secretary for industries and production and other stakeholders, including Pakistan Sugar Mills Associations (PSMA), Kissan Itihad, and federal and provincial representatives.

The meeting’s agenda included discussing and reviewing sugar stock availability, current market prices, sugarcane rates, present global market sugar prices, and industry production costs.

It is worth noting that officials’ incorrect estimates of wheat production and stock led to higher wheat imports. Excessive wheat output and unneeded imports oversupplied the market, resulting in a loss for farmers.

According to the official announcement, millers agreed to maintain sufficient local stocks to ensure the smooth supply of the commodity in local markets at a sustainable price.

In this regard, an agreement was reached between the government and the PSMA to ensure a smooth supply and stable price of sugar in the local market.

The federal minister said that the ex-mills sugar price will not be increased under any circumstances, and PSMA will clear all the pending payments to farmers on a priority basis.

He said the SAB will review the sugar prices and market stability again in a fortnight. He said that in future, the export of sugar will depend on price stability and stock availability in the country.

Published in Dawn, June 11th, 2024