KARACHI, Oct 27: Sindh sugar mills are demanding uniform sugarcane pricing policy throughout the country because extra cost of quality premium is a burden on the province’s industry, which was already confronted with huge surplus production.

The millers were highly critical of the provincial government for fixing quality premium and said: “The Sindh cabinet in its meeting held on Wednesday fixed sugarcane price at Rs43 per 40 kg, which is higher by Rs3 from the price normally fixed in Punjab.”

Addressing a press conference at the Karachi Press Club on Monday, executive committee members of the Pakistan Sugar Mills Association (PSMA) Sindh Zone criticized the Sindh cabinet decision and said that it was unreasonable as it contradicted national sugarcane price policy of the federal government and was against Sindh sugar millers’ outstanding demand for a uniform sugarcane price.

The members argued there had been never a province-based different set of support prices of wheat, rice, cotton, potato, onion or any other crop. However, it is an irony that price variation has been pursued exceptionally in the case of sugarcane.

They noted the federal government had been advising sugarcane support price at Rs42 per 40 kg in Sindh and Rs41 in Punjab for 2001-02 and 2002-03 seasons. Whereas the Sindh government, they said, had been fixing sugarcane support price at Rs43 per 40 kg, while the Punjab government had set it at Rs40. This has created a price difference of Rs3, translating into Re1 per kg increase in the cost of sugar production, they added.

PSMA executive committee member Qazi Amjad Abid Abbasi was highly critical of the Sindh government’s attitude and said the provincial government instead of rectifying the anomaly and saving the sugar industry seemed determined to destroy this key agro and rural-based industry.”

He further said that Sindh had been historically a sugar surplus province as it had been producing a million plus tons of sugar each season. It has to disposed of 400,000 to 600,000 tons of surplus sugar to the distant places. As a result, its sugar selling price has on average been lower by Rs1.30 per kg compared to the mills in the North.

With record production, he said, sugar surplus had pulled the ex-factory price down by Rs1,795 a ton to Rs14,357 in 2002-03. In 2001-02 season, sugar price had fallen by Rs3,712 per ton to Rs16,152, he maintained.

Qazi Amjad Abbasi said that higher cost of sugarcane and lower selling price of sugar had crippled the financial viability of the sugar industry in Sindh, eroding its revenues and inflicting losses.

He said the Sindh government had invited the PSMA (Sindh Zone) to discuss its problem and find a solution. Several rounds of meetings were held to overcome the problem.

In these meetings, he said, the Sindh government eventually held out a categorical assurance to arrange for a support mechanism that includes bridge financing facility of Rs3.50 billion at concessional rate, arrangement for 500,000 tons export of surplus sugar and financial support equal to cost-price differential and exemption of the sugar industry from effective sales tax at 18 per cent or reduction of sales tax to 10 per cent.

Based on this, he said, the Sindh sugar industry was asked to commence its sugarcane crushing campaign of 2002-03.

Regarding sugarcane support price at Rs43 per 40 kg, he said it was decided that payment of Rs40 per 40 kg to be made to the sugarcane growers for the season and payment of Rs3 would be made on export of surplus sugar and improvement of liquidity and restoration of profitability arising from the support mechanism of the Sindh government.