The sugar mill owners have announced to lock out sugarcane processing units during the 2009-10 crushing season in protest against Lahore High Court (LHC) orders on fixing sugar prices at Rs 40/kg, and demanded of the government to reduce the prices of 40/kg sugarcane from Rs 101 to Rs 40, and exempt the sugar industry under the tax net for providing the commodity to the consumers at Rs 40/kg.
Sources told Business Recorder that the millers have asked the federal government to reduce the minimum support price of sugarcane in order to comply with superior court orders for maintaining uniform sugar prices across the country, and demanded 16 percent general sales tax (GST) exemption on the industry, otherwise they would close the sugar mills during crushing season 2009-10, starting from November 1, 2009.
"The millers claimed that the provincial governments of Punjab and Sindh had announced minimum support price of Rs 100 and Rs 102 per 40/kg sugarcane respectively for upcoming crushing season, which are 150 percent higher than the support prices in crushing season 2006-07," sources said, adding that the millers have asked the provincial governments to reduce the support prices to Rs 40 per maund to reduce ex-mill price."
They said the ex-mill price of sugar in the country during 2006-07 was Rs 32 and the minimum support price of sugarcane was Rs 40 per maund and now the government had asked to fix ex-mill price Rs 36/kg and fixed the price of per 40/kg sugarcane at Rs 100 and Rs 101 for crushing season 2009-10. The millers warned the government to reduce support prices otherwise they would not operationalise their factories, they added.
Sources said the millers have also demanded of the government to exempt the sugar industry under the tax net like other agriculture sectors. The millers alleged the Federal Board of Revenue (FBR) is planning to collect taxes from millers according to new sugar price, which is Rs 56/kg against the old sugar price Rs 28/kg and warned if the government impose plan on the industry the millers would also increase the ex-mill rates.
They said that the country is likely to face gap in supply and demand, as sugar in 2009-10 would stand at 3.2 million tons with 10 percent decrease during 2009-10 against the demand of 4 million tons in a year. "During 2007-08 a record 4.7 million tons of sugarcane was produced in the country, sources said, adding that the country's sugar output in the fiscal year 2008-09 reduced to 3.7 million tons in crushing season 2008-09 with 40 percent decline in sugarcane production across the country."