Sugar mills seek govt’s nod for exports ahead of new season

Claim they are facing liquidity crunch and may not be able to pay farmers


Our Correspondent November 23, 2017
China could be an attractive market as it was paying double the international sugar prices. PHOTO: FILE

LAHORE: Sugar millers have pressed the government to immediately device a policy for the export of surplus commodity, fearing if the stock is not disposed of the industry may not be able to kick off fresh crushing season by the end of this month.

“As per law, the millers have to start crushing by November 30, however, due to the surplus stock, they are facing liquidity crunch and will not be able to pay off dues to farmers,” said Javed Kayani, Chairman of the All Pakistan Sugar Mills Association, at a press conference on Wednesday.

He pointed out that farmers were protesting for the payment of their dues, but how could millers clear their bills when they were unable to sell leftover stocks in the international market.

World Diabetes Day: The sweet and silent killer

“So far, around 450,000 tons of sugar has been exported; the government has allowed export of another 500,000 tons, but the industry needs rebate of at least Rs20 per kg to remain commercially viable,” he said.

He expected a bumper sugarcane crop of around 8 million tons in the new season valuing at Rs375 billion.

Saying that current international sugar prices were in the range of $320 to $325 per ton, Kayani emphasised that keeping the global market in view, the domestic sugarcane support price should be Rs120 per 40 kg instead of government-approved Rs180 per 40 kg.

With annual domestic consumption of 5.5 million tons, he believed that Pakistan would have surplus sugar stock of three million tons next year.

“How can industry pay farmers their dues with this surplus stock and low international prices; if things remain stagnant, the industry could default to the tune of around Rs190 billion, which will create chaos among farmers as well as sugar millers,” Kayani feared.

Sindh Assembly: Opposition protests for not being allowed to speak on sugar cane crushing

He suggested that China could be an attractive market as it was paying double the international prices. “Government can sell the leftover stock to China from its platform, which can save the domestic industry and the state will not have to pay the rebate.”

He asked the government to either frame a firm policy or deregulate the sector as its dual policy was hurting the industry badly.

“Farmers are blaming the millers, which don’t have the cash to pay; they are even negotiating with banks for loan repayments,” he said.

According to Kayani, already nine sugar mills have defaulted and two have shut down due to the liquidity crunch. “The next year could be the last crushing season for this industry,” if things did not improve, he warned.

Published in The Express Tribune, November 23rd, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

COMMENTS

Replying to X

Comments are moderated and generally will be posted if they are on-topic and not abusive.

For more information, please see our Comments FAQ