KARACHI: The sugar industry has refused to start crushing for upcoming season (2014-15), if the government continues to interfere in fixing of sugarcane support price and disturb the free market mechanism.

Taking strong exception of Punjab government decision of fixing sugarcane support price at Rs180 per 40kg, the sugar industry stated that this would mean that ex-mill market price of sugar could not be less than Rs61.72 per kg.

Pakistan Sugar Mills Association (PSMA) Chairman Iskander Khan talking to Dawn from Peshawar said that the association had already conveyed to the government that it would not be possible for the mills to start crushing at high support price of cane.

He further said that the government had already accepted in National Sugar Policy of 2009-10 that cost of sugarcane accounts for around 80 per cent of the total cost of production as it was the main input for sugar production.

He said the minimum support price of sugarcane rose by 383pc and 386pc in Punjab and KP, respectively, and in Sindh 378pc between 2001 and 2013. However, the retail price of refined sugar increased by 99pc during the same period.

The minimum price of sugarcane rose to Rs171 per 40kg in 2013 from Rs35 in 2001, while the price of refined sugar to Rs53.25 per kg from Rs26.73.

He complained that federal government’s intervention to keep and maintain ex-mill price of refined sugar under control through policy tools to protect the interest of consumers, but it equally impact the industry’s cash flow and its commercial viability.

As a result of this, he said, the growers also have to suffer because the industry fails to make timely payments to them and this adverse impact also have its implications on each upcoming cane crop.

He demanded of the government to impose duty on sugar imports and sought $50 per tonne subsidy to encourage export of surplus sweetener as is the case in India.

He disclosed that the government allowed exports of 250,000 tonnes of sugar just 150,000 tonnes could be exported during the last three months due to tough competition.

He expressed upcoming crushing season will start with a huge opening stocks of around 1.4 million tonnes and this will create a glut because new season sugar production estimates are higher at around 6 million tonnes.

Published in Dawn, October 19th, 2014