The Pakistan Sugar Mills Association (PSMA) (Sindh zone) has justified the move of sugar mills of the province to stop sugar cane crushing due to unbearable economic burden and losses caused by unprecedented revision of cane prices.
The Sindh agriculture department had raised cane prices to Rs60 on December 16 from Rs48/40kg notified earlier on October 22.
"The increase in minimum price by Rs 12, ie, 25 percent has rendered Sindh sugar mills inoperative, which are running into huge losses and is not affordable. It is against business norms and fundamental rights of pursuing profitable economic activities," a PSMA spokesman said here on Monday.
Minimum sugarcane price, being announced by the provincial government, needs to be identical, as sugar price is left to be determined by free market.
No such cover for sugar industry has been creating economic distortions, grinding the sugar industry, particularly in Sindh, to a halt.
Minimum sugar cane price for 2005-06 crushing season has been notified by the Punjab government at Rs45/40kg; NWFP (Rs48/40kg); and Sindh revised arbitrarily and in isolation prices to Rs60 from Rs48/40kg.
Minimum price, it may be noted, contains cost of production plus reasonable profit, which secures economic return to farmers and anything above it shall be left to market forces and not by official coercive enforcement.
The Sindh sugar industry is not in a position at all to absorb such a burden and bear its resultant brunt. Financial position of Sindh sugar industry has been badly shaken by similar pursuits of the past several years.
The sugar cane support price was introduced in 1980-81, with price differential between Punjab and Sindh at paisa 15 per 40kg. This was raised to paisa 25 in 1988-89; to rupee one in 1997-98; and Rs3 from 2001-02.
Besides, quality premium on incremental sugar recovery in Punjab is neither being notified nor paid since 1995. The Sindh sugar industry, to protect its economic viability, was compelled to approach the Supreme Court.
"The Sindh sugar industry has been a victim of higher sugar cane minimum price, since 1995 and the trend aggravated further from 2001-02," the spokesman added.
The PSMA (Sindh zone) urged the federal and Sindh governments to reassess the situation emerged, the worst for sugar industry of Sindh, and withdraw the notification raising minimum sugarcane price to Rs60/40kgs and evolve meaningful measures for revival and survival of the Sindh sugar industry.
The spokesman further added the PSMA (Sindh zone) wanted to make proposals in this regard so as to diffuse the current situation of suffocation and prevent collapse of the Sindh sugar industry.