Pakistan Sugar Mills Association (PSMA) and the government on Wednesday failed to resolve dispute on sugarcane price and crushing date, well informed sources told Business Recorder. The first round was attended by Prime Minister's Advisor Razak Dawood and a team of Ministry of National Food Security and Research headed by its minister. Another round will be held on Thursday (today) at the Ministry of Commerce.
According to sources, Ministry of National Food Security & Research informed the ECC last week that sugarcane was a high value cash/ food crop of Pakistan. Its production accounted for 3.6 percent in agriculture's value addition and 0.7 percent in overall GDP. It is mainly cultivated for sugar and sugar-related products like alcohol, molasses, and press-mud with an input for paper and board industry. Additionally, ethanol and electricity are also produced by some sugar mills. It provides raw material for industry which is the country's second largest agro-industry sector after textiles. Pakistan ranks 5th in respect of acreage and production, however, its level of yield is ranked 53rd in the world. Average yield of sugarcane in Pakistan is 620-700 maunds per acre which is much lower as compared to other cane producing countries. Presently, 82 sugar mills of the country are engaged in producing sugar with the production capacity of 6.8 million tonnes of sugar per annum as compared to national consumption of 5.3 million tones per annum. In the last 7 years, the area under sugarcane has increased by 9 percent on an average, whereas the production has increased by 22 percent. However, the estimated sugarcane production shows a declining trend at the level of 68.25 million tonnes, during 2018-19, due to multiple factors. Ministry of National Food Security & Research has regularly worked out the cost of production of sugarcane crop. In order to determine an appropriate indicative price for the next crop, all determinant factors are considered, like area and production, world outlook, cost of production, export and import parity prices, local and international prices and domestic requirement.
The Ministry of National Food Security & Research shares this working on the cost of production to the provincial governments before start of each crushing season. It was stated that Sugar Factories Control Act, 1950 authorises the provincial governments to fix the indicative price of sugarcane. Cost of production of sugarcane crop 2018-19 has been worked out at the level of Rs 179/40kg for Sindh as compared to Rs 171.96/40kg of the corresponding period of last year. Khyber Pakhtunkhwa uses the indicative price of sugarcane fixed by Punjab.
The Ministry of Industries & Production further informed that for crushing season 2017-18 it has estimated ex-mill price/ manufacturing cost of sugar at the level of Rs 45.86/kg. It is estimated that at recovery level of 9.96% additional molasses with 4.4% is also produced which yields an additional profit of Rs 21.12/40kg. Some sugar mills have installed extra plants for manufacturing of alcohol and electricity, which yield extra profit margin for sugar mill owners. The Ministry of Industries & Production has reported the sugar stock position for crushing season 2017-18 (Oct-Sept) at the tune of 7.158 million tonnes. The quantity includes 3.856 million tonnes with Punjab, 2.281 million tonnes with Sindh, 0.471 million tonnes with Khyber Pakhtunkhwa and leftover stock of 0.541 million tonnes.
The Ministry of National Food Security & Research apprised that Pakistan Bureau of Statistics on 15.11.2018 reported wholesale local price of refined sugar at the level of Rs 54.88/kg. International Sugar Organization has quoted sugar prices, which fluctuates between US $ 335-353/tonne during the month of November 2018 (for the period from 1st to 15th November 2018).
After detailed discussion, the ECC directed that the defaulter mill's owners should give commitment to the State Bank of Pakistan that first charge on the amount earned from export of sugar will be settled against the outstanding dues of farmers and for settlement of any default against any bank loans.
The ECC constituted a committee under the chairmanship of Minister for National Food Security & Research comprising Minister for Planning, Development and Reform and Adviser to the Prime Minister on Commerce, Textile, Industries & Production and Investment to look into the issues relating to sugar economy in a holistic manner and make recommendations with a view to ensure that production of sugarcane is profitable for the farmer, sugar processing and sales viable for the industry; and the product affordable for the end consumer. The committee will submit its report and recommendations to the ECC for consideration.
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