Low sugarcane production due to shortage of water in the country, the sugarcane crushing season would be ended on March 10, a month ago as compare to previous years.
According to Pakistan Sugar Mills Association (PSMA), at least 70 percent sugar mills in the country have stopped functioning on March 1, while the processing units in three sugar producing provinces including Punjab, Sindh and North West Frontier Province (NWFP) would stop production on March 10, 2010. Sources told Business Recorder, some 70 percent sugar production units have already been closed while 30 others would stop operation in next week. "It would be the shortest crushing season in the history of the country," they added.
"Before the current crushing season, the sugar mills light-up their boilers on October 1 to start sugar production and the season lasts till April 30 of the every year, they said, adding this year crushing started on December 1, 2009 and would be ended on March 10, 2010 indicating massive sugar crises." They said the sugar mills could not start crushing season due to unnecessary action of the government against sugar mills, bank default and non-issuance of the loan from the banks and DFIs.
On the other hand, the growers have refused to provide sugarcane stocks to the mills and sold whole crop to the middleman, they added. Elaborating the reasons of short crushing season, they said the government had increased the minimum support price of the sugarcane up to 22 percent from Rs 81 per maund to Rs 101 per 40 kilogram for crushing season 2009-10.
Keeping shortage of crop in view, the growers has increased the support price up to Rs 220 per maund to Rs 240 per 40 kilogram doubling the production cost, they added. Due to low yield of sugarcane crop during 2009-10 and a large number of sugar mills in the country a new war had started in the industry where every next miller is trying to combat his rival by purchasing maximum crop.
"Taking maximum advantage of the situation, the growers doubled the minimum support price to earn more from less available sugarcane crop," they maintained. Describing the other reasons of increase in ex-factory price, they said the commercial players have purchased huge stocks of the crop from growers before the beginning of sugarcane crushing season to manufacture "gur" (raw sugar).
"Many sugar mill owners forcibly purchased sugarcane from the commercial players at exorbitant rates to light-up the boilers of their factories," they added. Talking to Business Recorder, Chairman PSMA Iskandar M Khan said the association has scheduled annual general body meeting on March 11, 2010 to discuss the performance of the sugar mills during current crushing season.
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