KARACHI: In an attempt to stabilize local prices, the State Bank of Pakistan (SBP) has requested that banks handle the export of 500,000 tonnes of sugar.
The sugar business has been requesting approval to export an additional 850,000 tons of sugar, which is estimated to be worth $485 million.
On September 21, the cabinet’s Economic Coordination Committee (ECC) approved the export of 140,000 tonnes of the product. The market is concerned that the sharp rise in exports may drive up local prices, as has been the case frequently in recent memory.
Market concerns about price increases and shortages
The SBP said on Wednesday that “the federal cabinet has also ratified the decision while the ECC has allowed another 500,000 tonnes of sugar export with certain terms and conditions,” recommending banks to handle the requests of qualified applicants.
According to the data presented at the ECC meeting, as of September 30, there were 2.054 million tonnes of stockpiles on hand, although throughout the first ten months of the current crushing year 2023–24, overall consumption remained at 5.456 million tonnes.
As of November 30, the remaining projected stocks would be 1.014 million tonnes, even after accounting for the 0.140 million tonnes that have not yet been exported in accordance with the previous decisions made by the ECC. It was apparently mentioned at the meeting that 0.564 million tons of sugar will be available in excess.
The ministry calculated that there were 4.8 million metric tons of sugar in total in August. According to the ECC, 704,000 tonnes of sugar would still be available at the beginning of the next crushing season following the export of the allowed amount.
The domestic market has been severely impacted by sugar exports, and a small scarcity is heavily exploited. The retail price of sugar has doubled to Rs 150 kg in just three years.
According to the sugar business, the abundant sugarcane crops have yielded over a million tonnes of surplus, which is not needed for the local market. The sugar millers are more powerful than the government, but it is still cautious.
According to the SBP circular released on Wednesday, the banks would get documentation of their quota allotment from the provincial cane commissioner and retain a copy for their records.
Furthermore, it said that the exporters would have to give the banks an assurance that the shipment will be shipped within ninety days of the quota being allotted.
The banks will guarantee that export profits from Afghanistan are received through banking channels 100% in advance.
