Dear Members,

It is a great honour and privilege for me to accord a genial welcome to all the participants at this47th Annual General Meeting.At our AGMs members are given a detailed brief on issues relating to sugar industry. I am pleased to present to you the review for the year 2011-12.

Sugarcane crop showed a positive trend in area and production due to remunerative returns to growers. A total sugarcane production in 2011-12 was reported as 58.03 million tons, compared to 55.4 million tonsfor the year 2010-11. The sugar production from above crop was reported as 4.638 million tonsby the close of crushing season, which has surpassed our conservative estimates of 4.4 million tons, forecast in our previous annual report.

Total scenario of the year 2011-12 was thus as following:

The higher production of sugar reported in 2011-12 and carryover stock of previous year created a glut-like situation,which kept the prices subdued. The prime and foremost responsibility, which PSMA carried out was its efforts to make arrangements for disposal of surplus sugar. We held several meetings with the Ministry of Industries and as a result EEC directedTrading Corporation of Pakistanto initiate purchase of sugar through open public tenders:

1. First tender:                200,000 tons

(TCP was requested by PSMA to buy entire offered quantity of 378,000 tons @ 46.25/Kg against above tender for payments to growers for which ECC accorded approval)

1. Second tender:           100,000 tons

Government of Pakistan in addition also approved export of 100,000 tons with a per mill quota of 5000 tons during the crushing period.

Subsequently a meeting of Sugar Advisory Board was held at the request of PSMA on March 12, 2012, which was attended by all the stakeholders, PSMA, Provincial Governments, Growers’ representatives from all Provinces and concerned Secretaries of the Federal Government.

PSMA informed the participants about the indicative estimated production figure of 4.735 million tons and proposed a further disposal of 400,000 tons of sugar. The recommendations made atSugar Advisory Board remained unimplemented until PSMA sought an audition with President of Pakistan on May 3, 2012, wherein PSMA pleaded its case for disposal of surplus,agreed upon by all stakeholders in the SAB meeting. After due diligence and detailed discussionsMOI referred the matter to ECC, which decided as follows:

1. Trading Corporation of Pakistan to purchase 200,000 tons of sugar.
2. Export of 200,000 tons with a per mill quota of 5000 tons.

Tender for 200,000 tons was floated in June 2012which enabled the sugar industry to sell further stocks to TCP.

The availability of sugar remained extremely satisfactory until the end of sugar year, i.e., 30thSeptember, 2012. The carryover stock estimated by the government is likely to be over one million tons of sugar, which would clearly suffice for domestic requirement and leave the surplus for export. Pakistan Sugar Mills Association has written a letter to Prime Minister of Pakistan on 5th September 2012 in view of the current inventory for the following policy decisions for the year 2012-13:

1. Government should allow export of 500,000 tons of sugar before commencement of next season.
   
2. Iran wants to purchase 100,000 tons of raw sugar, the permission for which may also be granted as it can only be produced during the crushing season.
   
3. Trading Corporation of Pakistan may kindly be given prior directions to keep 500,000 to 600,000 tons of sugar as strategic reserves to meet the requirements of Utility Stores Corporation meant to benefit poor strata of society.

PSMA has been following up for permission of export of sugar before the commencement of Crushing Season and it is expected that Government of Pakistan would consider and approve the same in the forthcoming Sugar Advisory Board meeting in view of the current inventory for timely payments to sugarcane growers and fulfill financial and other obligations of the industry.

Government of Pakistan initially allowed export of 100,000 tons of sugar for which registration of contracts was to be made with State Bank of Pakistan by 15thApril 2012, and shipments were to be effected until 23rd of May 2012. Subsequently 200,000 tons of sugar was allowed to be exported for which, registration of contracts with State Bank of Pakistan was mandatory by 23rd July 2012 and export of sugar was to be made by 15th August 2012. For export of 200,000 tons of sugar condition to export by the specified date was removed by SBP on the request of PSMA. However,State Bank of Pakistan has reported physical export of 109,000 tons by 30th September 2012. The reason for non-export is as under:

On a country basis the estimated area of sugarcane during the crop cycle 2012-13 is reported around 1.13 million hectarescompared to 1.057 million hectares during preceding crop cycle, i.e., 2011-12. It is estimated that sugar production from an area of 1.13 million hectares would give an approximate yield of 64 million tons of sugarcane based on 56 tons per hectare. The sugar production forecast by utilizing 82% of sugarcane production with a projected recovery of 9.50% is likely to be around 5 million tons.

The consumption for 2012-13 for population of 180.71 million at 24 kg per capita is likely to be 4.337 million tons. PSMA has been making all out efforts for disposal of the surplus stocks.

Current indications for 2012/13 are that the ongoing increase in global sugar production seen over the last three years that elevated global output from 149.0 mln tons in 2008/09 to an unprecedented 177.1 mln tons in 2011/12 may come to an end. But while there may not be a fourth consecutive rise F.O.Licht do not foresee a decline either as output is projected to remain at last year’s record level and again reach 177.1 mln tons. (F.O.Licht)

ISO in its first formal forecasts for 2012/13, predict world sugar output rising by 2.3% to a record 177.4 million tons, led by a sharp recovery in Brazil, the biggest producer. However, consumption will rise more slowly, by 1.9%, to 171.5 million tons, leaving the world with an output surplus of 5.9 million tons.

In Russia expectation is that overall sugar output will be higher than the 5 mln tons produced last season. In contrast to Russia, Ukraine does not look too healthy total output in 2012/13 is seen falling to 1.8 million tons from 2.33 mln last year.  Some support for the world sugar market came from Brazil where sugar output is now seen at 32.7 mln tons.
In the Far East Indian mills have signed import deals upto 450, 000 tons of raw sugar. Sugar prices on the Indian market had jumped more than 23% to $680 a ton in the past three months. Country currently charges 10% duty on import. In Thailand sugar production 2012/13 may fall by 2-7% against the 10.24 mln tons produced in 2011/12. Exports could drop to 7.7 mln tons, down from around 8 mln expected this year.

Pakistan output in 2012/13 is forecast to reach more than 5 mln tons, white value, up from 4.75 mln last year. As a result sugar industry is urging the government to allow additional exports. According to Ministry of Industries current stock of sugar in the country stand at 1.88 mln tons. Government has allowed exports of 300,000 tons most of which has been sold to Afghanistan, Saudi Arabia and East African Countries.

The output in China during the new season is forecast to reach 14 mln tons, white value, up 22% year on year. F.O.Licht

At the conclusion of the review I would like to register my appreciation to Zonal Chairmen, CEC, Honourable Members and Secretarial Staff for their continued cooperation.