The government is reportedly considering to lift the ban on establishing of new sugar mills in Punjab on the insistence of two influential personalities, official documents and sources in sugar industry and Punjab government told Business Recorder here on Thursday.
The sources said a letter by Chairman Pakistan Sugar Mills Association (PSMA) Punjab Zone Javed Kayani to the Industries Department, Punjab, argues forcefully that a ban on establishing of new sugar mills in Punjab should be lifted despite the fact that most of the mills are operating at 50 percent capacity due to shortage of sugarcane.
Interestingly, Javed Kayani, who was reportedly under pressure to write such a letter, wrote on January 5, 2009 to Prime Minister Syed Yousaf Raza Gilani, urging him that more mills should be allowed to be set up as there are still certain areas in the province where sugarcane is in abundance and growers are experiencing extreme difficulty in disposing their crops timely.
"The installation of new mills in these areas is not possible because of existing ban by the Punjab government. It would be most appropriate that the Chief Minister of Punjab is advised to review the ban and allow setting up of new sugar mills to harness the agriculture resources," the letter states.
However, a senior official of the Punjab government told this scribe on phone that Chief Minister, Shahbaz Sharif is not interested in setting up a new sugar mill as he has already refused to avail such an opportunity in Rahim Yar Khan. Subsequently, Chaudhry Munir set up a sugar mill in Rahim Yar Khan, well informed source revealed on condition of anonymity.
Former Chief Minister Chaudhry Pervez Elahi had also established a sugar mill in RY Khan. The official further said that possibly Mian Brothers were wary that establishment of any mills in Punjab by them might lead to any scandal. Chairman PSMA (Punjab Zone), in his letter further stated that sugar industry has a potential of cogeneration of electricity, which can significantly mitigate the power shortage.
Apart from that it can also assist mills' owners to attain self-sufficiency in sugar without depending on imports. MTBE would also be replaced in fuel blending which would be an additional saving for the national exchequer, the letter added.
According to official documents, Assistant Economic Advisor, Industries Department, Punjab, in a "most urgent" letter written on March 13, 2009 to the Secretary General PSMA, Islamabad stated "I am directed to forward a copy of a letter, dated 5-1-2009 on the above subject received from Javed Kayani, Chairman PSMA (Punjab Zone), kindly furnish your well-considered comments to this department in the light of your previous letter No PSMA/CMP2006/096 dated May 30, 2006."
The sources said that Ministry of Industries and Production was sending a summary to the Prime Minister or the cabinet as a top official of the Prime Minister secretariat has instructed the Ministry to prepare the summary immediately. On March 13, 2008, the first meeting of the Sugar Advisory Board, which was held under the chairmanship of Secretary Industries, had decided to disallow establishment of new sugar mills in Punjab.
The meeting was attended by Dr Kausar Malik, Member(Food and Agriculture) Planning Commission, Shahid Hussain Raja, Additional Secretary(Minfa), Brigadier Hafeez Ahmad(retired) MD, USC, Dr Shakeel Ahmed Khan, Sugarcane Commissioner(Minfa), Secretary Food Balochistan, Secretary Industries Balochistan, Secretary Food, NWFP, Economic Advisor, Industries Department Punjab, Sugarcane Commissioners of Punjab, NWFP, President Kisan Board Pakistan, representatives of Farmers Association of Pakistan and President Sindh Abadgar Board besides other representatives of PSMA and other officials.
According to official documents the first meeting of the Sugar Advisory Board (SAB) was held on 13-3-2008 under the chairmanship of Secretary Industries, to have an overview of the sugar sector and to look into the issues/ problems of sugarcane growers and sugar industry. Secretary Industries briefed the participants about mandate/Terms of References (TORs) of SAB. He emphasised the need to come up with pragmatic approach/ proposals for sustainable growth of the sugar sector.
Additional Secretary Minfa appreciated the effort of Ministry of Industries for holding the meeting. He said sugarcane growers were facing some genuine problems which needed to be redressed. He proposed to have Sugar Advisory Board meetings at least twice a year - the one before the start of crushing season and the other after the crushing season.
The representative of Sindh Abadgar Board explained the difficulties of the sugarcane growers eg high cost of inputs, water intensive crop. He urged the government to study/ look at the experience of other countries. He added that subsidy on export of sugar be provided to the sugar millers and sales tax on sugar be reduced that provided it had a positive trickle down effect on the growers. He said that this be linked with timely lifting of sugarcane including payment to growers.
The representative of Kissan Board NWFP suggested use of unapproved varieties be discouraged. He added that due to frost, crop had suffered and resultantly there was less recovery. The millers are not lifting sugarcane and some mills have been closed. He complained about delay in purchase of sugarcane by sugar mills and delayed payment to the sugarcane growers.
The representative of Farmers Association of Pakistan Lahore reported that there were frequent instances of unnecessary deductions, under weighment, delayed/ lesser than fixed support price payment.
Sugarcane Commissioner Minfa and the Provincial Sugarcane Commissioners expressed their concerns regarding frequent non payment, delayed payment and unnecessary deductions on the sugarcane growers. They further proposed that the sugarcane prices be linked with the recovery rate. The member PSMA (former President of Sugar Technologists) said that it was need of the hour that new technology be brought in sugarcane farming, which could facilitate the growers to develop the varieties with high sucrose contents.
Member (Food and Agriculture) Planning Commission also supported the idea of the member PSMA (former President of Sugar Technologists) and said that the Research & Development Programme should be undertaken extensively to encourage high sucrose content crop. However, he emphasised that sugarcane growers as well as the millers should work jointly for promoting cultivation of sugar beet to supplement/ substitute sugarcane.
PSMA and its provincial chapters highlighted that the farmers and the millers suffer due to high mark up. The millers due to lack of liquidity and working capital find it difficult to make payments to the growers in time. PSMA added that current low price of sugar was causing financing loss to almost entire industry that could not be sustained any further. To alleviate this situation, PSMA insisted that TCP should procure sugar at a fixed price of Rs 29.50 per kg in the crushing season 2007-08, tendering should be fairly well spread, a mill should not be given a quota more than 5000 tons.
Each tender should be 100,000 metric tons in addition to 0.5 million tons strategic reserves, TCP should buy 0.5 millions tons which could be exported if desired. It is note worthy that TCP procures bulk of sugar from few chosen mills only whereas, the procurement of sugar was/ is to bail out the entire sugar industry.
The representative of Sindh Abadgar Board proposed that there should be ban on setting up of new sugar mills in the country. In this regard, the Secretary IP&SI informed the participants that very recently, the Prime Minister had been pleased to direct that "Provincial Agriculture, Industries and Law Department may determine the feasibility of putting a complete ban on new installation and expansion of sugar mills with immediate effect. Necessary action may be initiated under the Industries (Control on Establishment and Enlargement) Ordinance, 1963 with no relaxation for at least five years".
After detailed deliberations, the meeting recommended a ban on installation/ expansion of new sugar mills. The official of the Punjab government was of the view that a ban had been imposed on establishment of new sugar mills in 2006, but refused to comment on new development.
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