Islamabad: The Pakistan Sugar Mills Association (PSMA), representing sugar mills in country, has requested government to withdraw the 15% regulatory duty imposed on molasses exports.
In a letter addressed to the minister, PSMA (Punjab Zone) proposed the convening of a meeting with all stakeholders to deliberate on a way forward, ensuring careful consideration of the rights of all parties involved and resolving issues fairly and equitably.
The sugar industry in Pakistan has consistently faced cyclical challenges, evident from a decade’s worth of economic data. The industry is subject to extensive regulation at both the provincial and federal levels. The increasing costs of inputs, particularly the procurement of sugarcane at the notified support price, coupled with inadequate sugar prices within Pakistan, have led to significant economic and financial challenges for sugar producers.
Some sugar mills, through substantial capital investments, have established ethanol production distilleries. Members of this specific group, represented by PEMA, aim to procure and utilize cost-effective sugarcane molasses as a fundamental raw material for ethanol conversion, export the product, and generate substantial profits. However, a majority of sugar mills lack such infrastructure and opt to directly export molasses to bolster their foreign exchange earnings, supporting their sugar production operations and sugarcane payments.
Following 2009, PEMA faced the imposition of regulatory duty on molasses exports to secure subsidized sugarcane molasses, a crucial raw material for ethanol manufacturing and export. In recent years, ethanol production and export by PEMA members have witnessed significant growth. These producers, seeking affordable locally-produced sugarcane molasses, are advocating for either a complete ban or a staggering increase in the regulatory duty to 50%.
The primary objective of these PEMA members is to obtain sugarcane molasses at lower rates within Pakistan to facilitate ethanol production and export. This objective undermines the principles of free and fair competition for sugar mills without distilleries that rely solely on exporting sugarcane molasses.
A crucial aspect of this development is the recent representation made by PEMA before the Ministry of Commerce and Industry, leading to proceedings before the National Tariff Commission, Government of Pakistan. The Commission is currently evaluating the suggestions put forth by PEMA.
Non-Distillery Sugar Mills, constituting 29 out of 41 members of the Pakistan Sugar Mills Association-Punjab Zone, convened an extensive meeting on 29th February 2024. During the meeting, they expressed dismay and anxiety regarding the molasses issue, emphasizing that molasses, a major by-product of the sugar industry, contributes to almost half of the total quantity of sugar produced annually in the country.
