KARACHI: Months-long standoff between Pakistan Sugar Mills Association (PSMA) Sindh chapter and sugarcane growers has ended after the approval of Sindh government to provide subsidy on the export of sugar.
Millers had refused to buy sugarcane at Rs 182 per kilogramme, saying it was not feasible for them until and unless they were allowed export of surplus sugar and given subsidy on export at Rs 20 per kg; as sugar prices in international market were lower.
On the other hand, sugarcane growers remained reluctant to sell their produce on lower than Rs 22 per 40 kg.
However, millers have been asked that they should ensure clearance of liabilities of sugarcane growers as qualification for getting export subsidy solely depends on this condition.
After getting additional subsidy of Rs 9.30 per kg for export of sugar, it was expected that crushing in Sindh would be started soon, which normally starts around November 1 to 5.
Millers have an estimated 500,000 tonnes of surplus sugar while the production cost of sugar comes to Rs 64.19 per kg.
Economic Coordination Committee of the cabinet had allowed export of 1.5 tonnes of sugar and cash freight support of Rs 10.7 per kg, but millers were still not willing to start crushing in Sindh and Punjab.
The remaining amount of subsidy of Rs 9.3 per kg on export of sugar, as requested by the Sindh agriculture department for millers, has now resolved the crisis between millers and growers.
A spokesman of PSMA said around 28 sugar mills in Sindh would start their boilers and crushing would begin within a week. “The boilers need around 15 to 20 days to come into operation”.
Sugar production in Sindh usually starts in the first week of October and November in Punjab.
The spokesman said that higher prices of sugar in the country were due to disequilibrium between its demand and supply. Increase in prices of sugarcane and other factors were responsible for higher prices of sugar in the country, the spokesman added.
Trading Corporation of Pakistan had been selling sugar at discounted rates, at around Rs 57 per kg.
Wholesale dealers expressed hope that after a positive conclusion of the matter, sugar consumers would get sugar without any shortage.
A member of Karachi Chamber of Commerce and Industry said rapidly rising ex-factory sugar prices and soaring prices during peak production season (November-March) was particularly alarming. After this decision, there would not be any problem in delaying crushing or production of sugar, he said.
He said that government should take notice of illegal activities of involved speculators doing ‘blind business of sugar’ and cleverly shifting the blame on sugar mill owners.
The Sindh government resolved the sugarcane support price issue after a number of meetings with growers’ bodies and millers association, creating a consensus among them to rationalise the rate of cane.
Published in Daily Times, November 5th 2017.