Bitter matters: Mills demand uniform sugarcane price

Association warns govt crushing will not begin until then

LAHORE: The Pakistan Sugar Mills Association (PSMA) has warned the government that sugar crushing will not commence until a uniform price of sugarcane has been enforced across the provinces.

Addressing a press conference on Thursday, PSMA Central President Iskandar Khan and PSMA Punjab President Javed Kayani called upon the government to withdraw an ordinance issued by the Punjab government binding sugar mills to pay the dues of growers within 15 days of procurement. Under the ordinance, those who fail to pay the dues will have their mills sealed and their stocks auctioned off.

However, the two PSMA chiefs warned that government should not interfere in the running of a business.

The two chiefs took a detour down the annals of history and informed how government, after Sugarcane Control Act 1950, would buy 15-days of stock from sugar mills and the prices would thus remain regulated within the market. “However, the government has abandoned the practice of procuring the stock, while retaining the practice of fixing the price. Adding to millers worry, the ex-factory prices run unchecked and they are forced to settle the dues within an atrociously limited timeframe.

“In order to understand why 15-day timeframe is unrealistic, one needs to look at the dynamics of sugar industry. Sugarcane is grown for four months. The consumption, however, occurs throughout the year. Hence, money flows in continually throughout the year which means making lump-sum payment immediately isn’t easy.”

They also demanded that the government should permit export of 500,000 tons of sugar immediately, with export rebate to meet the international prices. This would help clear the carryover stocks enabling millers to start next crushing season. Additionally, they argued that government should incentivise growers by means of subsidies to bring down ex-factory prices. This would not only make local sugar more competitive by bringing down the prices, but also benefit industries.

Facilitating the next crushing season should be among government’s top priority.

Published in The Express Tribune, November 13^th, 2015.

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