Sugarcane support price sparks uncertainty

Growers, millers of Punjab reject the price for their own reasons.

LAHORE:

The sugarcane support price, announced a few days ago, has created a wave of uncertainty among farmers and sugar millers across Punjab as the former believe that the price will not even cover their cost of production and the latter consider it higher that will push sugar prices in the market.

Punjab Cane Commissioner Captain Usman has set the support price at Rs170 per 40 kg this year, an increase of Rs20 or around 13% compared to previous year’s price of Rs150 per 40 kg.

To discuss and sort out the price issue, the food secretary of the province has called a meeting of sugar millers and farmer bodies on November 15.

Farmer lobbies have rejected the price, saying it will not cover the cost of production, which they put at around Rs190 per 40 kg. The support price should be at least Rs200, they say.

“This price will cost the cane growers of Punjab about Rs18 billion. This will be damaging for them as they depend on cash for sugarcane, which is considered a cash crop,” Ibrahim Mughal, Chairman of Agri Forum Pakistan – a body of farmers, told The Express Tribune.

He expressed fears that the loss to the farmers would lead to less cultivation of sugarcane next year. He expected up to 15% decline in sowing area next season.

Punjab produces around 70% of sugarcane in the country. This season, overall sugarcane production is expected to be more than 60 million tons.

The committee, constituted by the provincial government to set the sugarcane price for 2012, started deliberations in January and proposed a price of Rs168 per 40 kg – considered a fair price at that time. However, the farmers argue inflation has increased considerably, which has pushed up prices of inputs like urea, pesticides, diesel and other costs.

Another farmer lobby group, the Kissan Board Pakistan, is formulating a strategy to deal with the challenges faced by the farmers.

“A clear price mechanism has been established by the Agriculture Price Committee, which says the price of per maund of sugarcane should be equal to the price of 4 kg of sugar,” a spokesman for the Kisan Board said. Keeping this in view, he said, the price of sugarcane should be above Rs200 per 40 kg.

The sugar millers have come up with their own set of arguments. “We are also sowing cane in our farms and our cost comes to around Rs135 per maund,” said Pakistan Sugar Mills Association (PSMA) Chairman Riaz Qadeer Butt, while talking to The Express Tribune.

However, he agreed that the crop could cost over Rs170 per maund to some farmers, but “we have to consider the average crop price.” He described the increase in support price as a move on the part of the government to please the growers in an election year.

The millers have asked the government to take the price back to the previous year’s level, otherwise they will have no option, but to increase the sugar price.

According to the PSMA chairman, at the price of Rs170 per maund for sugarcane, the price of sugar will be around Rs62 per kg. At present, sugar is sold between Rs52 and Rs54 per kg in the market.

“How can we sell sugar at a loss, this will not only hit the millers, but also the farmers because mills will not be able to pay to the farmers,” Butt said.

Referring to the November 15 meeting, he said the millers would present real facts about the sugarcane crop and “we have completed homework in this connection.”

Published in The Express Tribune, November 4^th, 2012.