LAHORE - The Pakistan Sugar Mills Association Punjab chairman Javed Kayani has urged the provincial government to intervene and support the mills for payment to cane growers, as the industry cannot make full payment due to liquidity crunch.
Addressing a press conference here on Thursday, PSMA Punjab chairman said that Sindh millers are dumping their cheaper sweetener in the Punjab market causing losses to its industry. However, the sugar mills have so for paid Rs95 billion to cane growers out of Rs110 billion. As some mills in Punjab are still crushing the cane total payment to the growers may touch the figure of Rs140 billion.
The govt allowed sugar export quota of 0.65 million tons but the millers have so far exported only 0.3 million tons sugar due to low rate of sugar in the international market while the local price is also very low, causing losses of billions of rupees to the millers, he added.
In case the financial crunch continues, the payment to sugar growers will get stuck up this season. This will directly hit the rural economy, which is already passing through adverse times after crash of cotton and paddy prices during the last season. The export package announced by the federal government for sugar mills has not been implement so far, as the TDAP has stopped the rebate on sugar export of more than Rs2.6 billion for the last two and a half years.
Javed Kayani said that the Punjab government’s unilateral fixation of sugarcane price at Rs180 per 40kg created a purchase price difference of Rs22 per 40kg within the country, lifting the Punjab industry cost by at least Rs22.5 billion. He said that additional cost of Punjab millers have also rendered them uncompetitive within the country against the Sindh sugar industry, which is also enjoying provincial government support besides getting exemption of road cess.
As the sugar production cost in Sindh is lower than Punjab, the millers are dumping their produce in Punjab market, distorting the sales of local producers. Presently, the Sindh mills have been dumping over 100,000 tones of sugar in Punjab. The total sugar consumption in the country is around 390,000 metric tones, out of which 225,000 metric tones is supplied by Punjab and 100,000 metric tons by Sindh. He said that Sindh government has announced to compensate the millers by paying Rs12 per 40kg to the growers despite the fact that sugarcane rate was finally fixed at Rs172 per 40kg in Sindh as compared to the support price of Rs180 per 40kg in Punjab.
After comparison with Sindh, the calculation shows the rate of sugarcane in Punjab should stand at Rs158 per 40 kg.
Hence, the Punjab government, in line with the Sindh authorities, should announce the additional payment of Rs22 per kg, besides formulating a policy to issue interest-free loans to sugar mills which are already facing forced closure. The Punjab government should follow the path of Sindh to help the industry for timely payment to growers, instead of harassing the millers.
“Instead of providing us a level-playing field, facilitating mills to operate without any disruption, the police and district authorities are creating hurdles and harassment. He said that if government continues to announce cane support price than it should also intervene to stabilize sugar prices to avoid losses faced by the millers, he argued.
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