Government may allow sugar import if millers delay crushing

The government may allow sugar import if the sugar mills stick to their decision to delay cane crushing this season. The sugar import option could be useful as internationally the commodity's prices are consistently declining.
Sources told Business Recorder on Friday that the sugar mills earlier told the government that they would delay cane crushing this season and, according to the Pakistan Sugar Mills Association (PSMA), the crushing could be delayed as late as January, 2008.
"The PSMA decision has disturbed the government and it has started contemplating various options to address the issue if the sugar mills really delayed crushing," according to the sources. Apart from import, the federal government could also ask the provincial governments to invoke the Sugar Factory Control Act, under which the provincial governments could instruct the sugar industry to start crushing in October, the sources said.
The sources said that despite decision of the sugar mills, the government would hold negotiations to persuade the millers to start crushing in October and would be welcomed by the growers. The sources said that sugar price was coming down in the international market. It is around Rs 19 per kg in the international market after Brazil switched over again to produce sugar on priority. The price of sugar would not be more than Rs 22 per kg on arrival at Karachi port.
Besides, India has additional sugar stock of over 10 million tonnes and the government could import the commodity if the situation worsened, sources said. According to the PSMA, the government failed to honour its commitment with the PSMA.
In its decision, the PSMA has informed the government in clear terms that sugar industry would not come to government's help, if the current policy continued hitting the industry hard if low sugar prices trend continued for the next few months. A number of sugar mills defaulted on payments to the growers due to the crisis created by the ill-conceived policy of the government.
PSMA held the government responsible of pushing the whole industry in trouble by dumping and reminded the authorities that massive import of sugar last year and then unloading of buffer stocks in the market played havoc with the industry.
The government, on the other hand, denies of making any commitment with the industry that ex-mill sugar prices would be fixed at Rs 31 per kg last season. At a recent meeting, the PSMA failed to provide any proof if there was any such commitment made by the government, the sources added.