Sugar mill owners have been accused of posing challenges to the country's food security by causing delay in payment to sugarcane growers. An official source of Ministry of National Food Security and Research (MNFS&R) told Business Recorder exclusively shared details of the last meeting of sugar advisory board with Business Recorder.
"Sugarcane growers lodged their complaints in the last meeting of sugar advisory board on November 4 that some sugar mills in Punjab have not made payment to growers". As a result of delay in payment, official expressed concerns that sugarcane growers would switch to other crops including maize and consequently Pakistan would become a sugar importing country instead of a sugar exporting one.
Official documents available with Business Recorder reveal that in sugar advisory board's meeting, the representatives of growers accused Kamalia Sugar mill, Al-Huda Sugar Mill and Haseeb Waqas sugar Mill in Punjab of not making payment to growers. The meeting directed the cane commissioner Punjab to ensure early payment to growers from these sugar mills.
The document further reveals that the representatives of food ministry informed the meeting that government of Sindh was not allowing subsidy to sugar mills on sugarcane price and this may result in delay in sugarcane crushing in the province. The cane commissioner of Punjab, however, was optimistic that crushing in the province would start in the last week of this month.
The representative of the sugar industry told the meeting that sugar mills are facing serious financial problems therefore they should be allowed to export 1.1 million tons of surplus sugar in order to enable the mill owners to make timely payment to cane growers and start crushing on time. The representative further warned that wheat sowing might by delayed if sugar mills fail to start crushing on time.
However, Ministry of Industries and Production refused to accept the demand of sugar mill owners regarding export of surplus sugar and contended that it is not possible to allow export at this stage as there is uncertainty with respect to the start of the crushing season in Sindh.
According to official documents, the average sugar retail price and wholesale price was Rs 59.81 per kg and Rs 56.75 per kg, respectively on October 31, 2015. The international sugar price of refined white sugar and raw sugar was US $384.40/ ton (Rs 40.11 per kg) and US $309.96/ ton (Rs 32.34 kg), respectively. The representatives of Pakistan Sugar Mills Association (PSMA) suggested that there should be a mechanism to analyse the sugar cost and price at the federal level. The growers pointed out that the price of sugar and sugarcane can not be correlated because three by-products including baggasse, sugar mud and molasses are also produced in the sugar manufacturing process.
The representative of PSMA told the meeting that there is a disparity in the sugarcane price fixed by different provinces: in 2014-15 sugarcane price in the province of Sindh was reduced from Rs 182 per 40 kg to Rs 172 per 40 kg following the directives of Sindh High Court; the sugar mills of Sindh actually paid Rs 160 per 40 kg and the remaining Rs 12 per 40 kg was paid by the Sindh government in the form of a subsidy. The sugarcane price was Rs 180 per 40 kg in the province of Punjab. There should be a mechanism to fix sugarcane price at federal level to ensure a uniform sugarcane price, the PSMA representatives suggested.
During the meeting it was agreed that sugarcane price is a provincial subject therefore federal government cannot interfere. The representative of the MNFSR explained that Agriculture Policy Institute (API), the attached department of MNSFR, determines the sugarcane price on the basis of cost of production of sugarcane and that is communicated to the provincial governments each year. A sugar control board has been set up under the Sugar Factor Control Act 1950 in each province which fixes the sugarcane support price in consultation with stakeholders including growers and sugar industry. According to provincial cane commissioners, the total stock of sugar on 3 November was 1.112 million tons with Punjab accounting for 0.561 tons, Sindh 0.500 tons and Kyber Pakhtunkhwa 0.051 tons.