KARACHI: The State Bank of Pakistan (SBP) has asked banks to process the export of half a million tonnes of sugar, which may destabilise domestic prices.
The sugar industry has been seeking export permission for another 850,000 tonnes of sugar worth about $485 million.
The Economic Coordination Committee (ECC) of the cabinet had on Sept 21 allowed the export of 140,000 tonnes of the commodity. Market fears that the rapid increase in exports could push the local prices witnessed many times in the near past.
Market fears shortages and hike in prices
“The ECC has allowed another 500,000 tonnes of sugar export with certain terms and conditions while the federal cabinet has also ratified the decision,” the SBP said on Wednesday, advising banks to process the requests of eligible applicants.
The information shared in the ECC meeting showed that the existing stocks stood at 2.054m tonnes as of Sept 30, while total consumption stayed at 5.456m tonnes during the first 10 months of the current crushing year 2023-24.
Even after taking into account the 0.140m tonnes, which are yet to be exported as per the earlier ECC decisions, the remaining expected stocks would be 1.014m tonnes as of Nov 30. At the meeting, it was reportedly said that the sugar would be available in surplus at 0.564 million tonnes.
In August, the government estimated total sugar stocks at 4.8m metric tonnes. The ECC believes that after the export of the permitted quantum, 704,000 tonnes of sugar would still be available at the start of the new crushing season.
Sugar exports have been a critical issue for the domestic market, and a slight shortage is exploited on a large scale. Within three years, the sugar retail price has doubled to Rs150 kg.
The sugar industry claims the bumper sugarcane crops have produced a surplus of more than a million tonnes and are not required in the domestic market. The government is cautious, but the sugar millers are more powerful.
The banks will obtain proof of quota allocation from the provincial cane commissioner and keep a copy in their record, said the SBP circular issued on Wednesday.
It added that the banks would obtain an undertaking from the exporters to ship the consignment within 90 days of the quota allocation.
In the case of Afghanistan, the banks will ensure 100pc advance receipt of export proceeds through banking channels.
Published in Dawn, October 17th, 2024
