Crushing nears amid sugar crisis

FBR initiates stringent monitoring, deploys teams to trace stocks, sale

RAHIM YAR KHAN:

The sugarcane crushing season is set to commence in two months against the backdrop of scandals involving speculative trading, smuggling and price hikes of sugar.

The Federal Board of Revenue (FBR) has initiated stringent monitoring measures to ensure that the sugar mills maintain stocks as per the country's demand.

Monitoring teams have been deployed to compile the sales and stock record of all sugar mills.

However, despite the efforts, sugar is being sold at about for Rs170 per kg, far surpassing the government approved rate of Rs100. Ahead of the crushing season farmers lamented the practice of acquiring cheap sugarcane from farmers and selling sugar at inflated prices.

A local leader of farmers, Sardar Muhammad Yaqoob, said while speaking to The Express Tribune that restrictions had been imposed on sugar prices and transportation but the government had failed to accurately inform the courts about the prevailing circumstances.

When farmers approached the courts for higher support prices in view of increased costs of electricity, fertilisers, diesel and labour having rendered the cultivation unsustainable, they referred the matter to the government departments concerned.

The authorities maintain that FBR teams have been assigned the task of compiling daily record of sugar stock and sales, as well as tracking the commodity leaving the mill premises. The monitoring is aimed at preventing sales tax evasion.

The teams will be deployed at sugar mills for an indefinite period. A former bar leader, Amir Nadeem advocate said a tax evasion scandal involving mills during the 2021 crushing season had prompted the installation of a track and trace system by the FBR to closely monitor sugar production and distribution.

The digital monitoring system was implemented in 79 mills, preventing sugar bags from being removed from factory premises and sold without a tax stamp. The transparency led to difficulties in concealing theft by sugar mills.

The 2022-23 crushing season witnessed a substantial increase in sugar production, reaching 7.51 million tonnes by March 24 as compared to 5.63 million tonnes in the previous season.

The 34 per cent rise was attributed to the monitoring efforts.

The FBR collected Rs26.5 billion in sales tax in the first four months of the season, showing a 33% increase over the same period in the previous season, amounting to an additional Rs6.59 billion in revenue.

Additionally, the FBR Inland Revenue Enforcement Network (IREN) conducted over 60 raids across the country's markets to ensure the effective implementation of the track and trace system in the fight against tax evasion.

During the operations, unsealed bags without the required tax stamps were seized as per legal procedures.

However, the digital system later failed to monitor sugar production and distribution, resulting in the escalation of prices and smuggling.

When asked about variance in the measures for achieving the wheat and sugar targets, Punjab Food Secretary Zaman Wattoo said the government would approaching the court in this regard.

Published in The Express Tribune, September 8^th, 2023.