ECC likely to approve incentives for sugar mills

incentives-for-sugar-mills

December 18, 2014 Mushtaq Ghumman – BR Report –

Economic Co-ordination Committee (ECC) of Cabinet is expected to approve incentives for sugar mills aimed at resolving issues being faced by the industry and growers. A delegation of Pakistan Sugar Mills Association (PSMA) led by its Chairman Iskandar Khan met Finance Minister Senator Ishaq Dar a couple of days ago and discussed with him issues of sugar industry and growers who are protesting against a low price of their produce.

A committee comprising representatives of Ministry of National Food Security and Research, Commerce, Federal Board of Revenue (FBR) and PSMA will submit joint recommendations to Finance Minister Ishaq Dar. Well informed sources told Business Recorder that PSMA has submitted following proposals to the ECC; (i) promulgation of SRO 77 with the provision of export through land route to Afghanistan and the Central Asian Republics; (ii) inland freight support; (iii) TCP intervention; (iv) the release of inland freight subsidy claims by TDAP; and (v) deregulation.

The Finance Minister was informed that ECC approved export of 0.5 million tons of sugar on November 12 but State Bank of Pakistan (SBP) has so far not registered a single contract approval as an approval still awaited. Sugar mills’ representatives also demanded further disposal of 1.25 million tones of sugar through export. The statistics submitted to the committee indicate that if sugarcane price is Rs 155 per 40 kg, a break-even will be achieved at Rs 55.06 per kg. At Rs 170 per 40 kg, break-even will be at 59.36 per kg, at Rs 180 per 40 kg, break-even will be at Rs 62.23 per kg and Rs 190 per 40 kg, break-even will be at 65.10 per kg.

Sugar stock was 1,028,091 MT as on October 15, 2014 and 645,091 MT as on November 15, 2014. Expected sugarcane production will be 75 million tons of which the mills will utilise only 80 percent. Expected crushing will be around 60 million tons. On the projection of 9.50 per cent total sugar production will be 5,700,000 metric tons and consumption in 2015 is estimated to be 4,600,000 metric tons which implies a surplus 1,100,000 metric tons of sugar. Total surplus is estimated to be 1,745,000 metric tons.

According to sources, if sugarcane price is 180 per 40 kg, recovery in Punjab and Sindh will be 9.50/9.72 per cent. Thus price will be Rs 62.23 per kg. If export price is Rs 36.88, deficit in Punjab and Sindh will be to the tune of Rs 25.36 and Rs 26 per kg, respectively.

In case sugarcane price is Rs 170/172 per 40 kg, recovery will be 9.50/9/72 percent and the cost of sugar will be Rs 59.36 per kg. This implies that the price difference will be of Rs 22.48 per kg in Punjab and Rs 23 in Sindh at export price of Rs 36.88 per kg. Sugar industry further stated that if sugarcane price is Rs 155 per kg, recovery will be 9.50/9.72 per kg which shows the cost of sugar will be Rs 54.06 per kg. The government has to extend a subsidy of Rs 17.18 per kg in Punjab and of Rs 16.98 kg in Sindh.
Sugarcane Growers, Sugarcane, Growers, Complaint Cells, Agriculture, Sugar Mills, Crop, ECC

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