THE commencement of the sugarcane crushing season has been unduly delayed this year, leaving growers high and dry. Sindh-based sugar millers have challenged the provincial government’s authority to fix the sugarcane price.

So far only two sugar mills — Matiari and Sanghar — have started crushing. Some factories have only fired up their boilers so far.

The Sindh government fixed the sugarcane price at Rs182 — up Rs2 from Punjab’s cane price — against farmers’ demand of Rs210 per 40kg.

The price was fixed as late as on November 7.

At 18.531m tonnes, cane production exceeds the official target of 17m tonnes for this season. The yield has increased by 3pc per hectare to 58.5 tonnes, against the earlier estimate of 56.7 tonnes. The current crop has fully matured for harvesting. Lodging is being reported in areas where varieties of short duration were grown. While the crop is losing weight — resulting in monetary loss for farmers — it is beneficial for millers, as, in such cases, the recovery of sucrose content increases.

Every year, the delay in crushing has been a bone of contention between farmers and millers. The delay puts the growers in a difficult position. Cultivators either sell their crop at whatever rate is being offered, or keep the crop intact in the fields as long as possible by providing water, which is actually meant for wheat.

The Pakistan Sugar Mills Association (PSMA), Sindh, argues that while the provincial government fixes the cane price, it leaves the price of the end-product (sugar) to the vagaries of the free market.

Cane production in Sindh, at 1.85m tonnes, exceeds the official target of 17m tonnes. The yield increased by 3pc per hectare to 58.5 tonnes, against the estimated 56.7 tonnes. The current crop has fully matured for harvesting

According to PSMA Sindh chairman Ahmed Bawani, it is easier for millers to import sugar under present conditions, instead of crushing the crop to pay the price fixed by government.

He believes that the government is forcing them to purchase cane at the official rate, which is difficult for them. He says full-scale export of sugar is not allowed and the price of sugar stands at Rs42 per kg. With this price scenario, how can millers pay Rs182 to cane producers, he asks.

Sindh Abadgar Board vice president Mahmood Nawaz Shah and Sindh Chamber of Agriculture’s (SCA) Nabi Bux Sathio were surprised that the millers were objecting to the fixing of the cane price. They contend that the millers ignore the fact that they get multiple by-products like bagasse, ethanol and molasses out of sugarcane.

“Figures also prove that the recovery of sucrose content is more than Sindh’s benchmark of 8.7pc, but the growers don’t get paid for the quality premium on every 1pc of recovery as the millers obtained a stay order against it a decade back,” argues Shah. He says the sucrose recovery usually varies between 9-10.5pc in Sindh, and sometimes even goes up to 11pc.

The cost of farmers’ inputs — including urea and DAP fertiliser, diesel and pesticides etc — has increased manifold over the last several years, Sathio says.

Growers spend Rs142,000 per acre on various heads, and even if they get a yield of 600 maunds per acre (although the national average is 560 maunds), they would get Rs100,000 per acre if the price is Rs182. “Punjab’s mills have started crushing and the PSMA Punjab chapter has not filed a petition there,” he says.

Sindh has around 37 sugar mills, two of which are unlikely to start cane-crushing this season. The number of sugar mills in has recently increased in the province, and some of them have reportedly raised their crushing capacity. Such factories are mostly located on the left bank of the Indus, where the availability of water is relatively better.

Farmers note that the increase in the number of sugar mills, particularly in areas otherwise known for cultivating the cotton crop, indicates the profit margins offered by the sugar business. They reject the PSMA’s argument that the mills are not able to meet their cost of production.

However, the millers argue that prices of commodities like basmati and fresh milk have risen by 285pc during 2000-2001 to 2012-2013. In comparison, the price of sugar has increased by 92pc.

But growers’ representatives hint at an alliance between the government and the millers. They recall that the meeting to fix the cane price between millers, farmers and the agriculture minister was held on October 26, but the agriculture department withheld the issuance of the notification. By that time, the millers had already moved the high court.

Published in Dawn, Economic & Business, December 1st , 2014