Key Takeaways
- The government has declined the Pakistan Sugar Mills Association's proposal to export 0.6 million tons of surplus refined sugar.
- This decision aims to prevent local price hikes and ensure domestic supply security until the next crushing season.
- Sugar mills claim that exporting half of their surplus stock could generate at least USD273 million.
The government has rejected a request from the Pakistan Sugar Mills Association (PSMA) to export over 0.6 million tons of surplus refined sugar, citing concerns about local market stability and price hikes.
In a statement, senior officials from the Ministry of Industries and Production explained that the final decision on exporting the surplus will be made after the start of the new crushing season in October. This move is aimed at preventing any potential shortages or price fluctuations in the domestic market.
According to PSMA officials, allowing sugar exports now could create a challenging situation for mills during the upcoming crushing season when they need to offer better crop rates to farmers. This could lead to another crisis within the industry.
The government's decision is based on previous experiences where permitting sugar exports led to significant price increases in the domestic market. Last year, after exports were allowed, retail prices soared to Rs250 per kg in some areas and reached Rs220 per kg in urban centers. Currently, local sugar prices are around Rs150-160 per kg.
The Ministry of Industries and Production emphasized that delaying the decision ensures domestic supply security and keeps local prices stable. They stated that if exports were allowed now, it could create a serious challenge for mills to offer better crop rates to farmers during the upcoming crushing season.
PSMA officials argue that exporting half of their surplus stock would generate at least USD273 million in foreign exchange. Exporting one million tons of sugar would yield approximately USD445 million. However, these figures are contingent on the government's decision and current market conditions.
The industry currently faces domestic prices even below the cost of production, with global white sugar prices hovering around USD455 to USD465 per metric ton. This situation highlights the urgency for mills to explore export opportunities but also underscores the need for careful consideration by the government.
While the PSMA is pushing for exports as a means to generate foreign exchange and support farmers, the government remains cautious about the potential impact on local markets. The decision will be revisited once the new crushing season begins, ensuring that any export decisions are made with the best interests of domestic supply and prices in mind.
