SUGARCANE growers in Sindh complain that they are not only being denied the officially notified price, but their crop is also being purchased at a rate that is less than last year’s. This is due to weak oversight by the provincial authorities.

The cane-crushing season is heading towards its end, but the sugar mills are mostly adamant that they will not pay the support price of Rs182 per 40kg. Growers are finding it difficult to manage the sowing of their rabi crops in the absence of the necessary cash flow. This crop is, by and large, being purchased at Rs155 per 40kg, and not at Rs182.

The provincial chapter of the Pakistan Sugar Mills Association (PSMA) had taken the cane price issue to the high court to deny cane producers the price fixed by the government. The price was fixed as late as in October, a time when sugar factories were required to start crushing under the Sugar Factories Control Act 1950.

Farmers complain that they are currently incurring a direct loss of Rs27 per 40kg on sugarcane sales

Growers are worried that though Sindh High Court’s had dismissed the sugar mills plea challenging the support price, they would still not be able to get any advantage of it due to market manipulations by factory owners. The manipulation, according to farmers, is that cane producers — barring influential landholders — are not allowed to directly sell their crop to the mills. Their crop is purchased in the name of someone who is directly or indirectly connected with the mills.

“Around 80-90pc of cane is bought by the mills through middlemen or someone who is not the actual grower to prevent farmers from going into litigation to claim the official cane price,” states Nabi Bux Sathio, genereal secretary of the Sindh Chamber of Agriculture (SCA).

The mills issue certain codes or documentation number to a cane producer which proves that a certain quantity of cane has been purchased from that person at a certain price. The farmer, otherwise, is free to sell his produce to anyone he likes, or lodge a complaint against the mill, explained Sathio. Since small growers cannot afford litigation, they are selling cane at Rs155.

Sindh has 37 sugar mills, but some of them are not crushing cane and have stayed closed for various reasons, including payment of liabilities

Sindh’s sugar mills paid the provincial government-issued price of Rs172 per 40kg last year. Initially, the Sindh government had announced the price at Rs180 — only to buckle under the miller’s pressure and later re-fixed it at Rs172.

The farmers complain that they are currently incurring a direct loss of Rs27 per 40kg and would face legal hitches in claiming the difference even after the high court issued an order in their favour.

“We fail to understand that as to how this Rs155 price has now become justified or affordable from the millers’ point of view. They paid us Rs172 in 2013-14 after differing with the government’s rate of Rs180,” argues Mahmood Nawaz Shah, vice-president of Sindh Abadgar Board.

Sindh has 37 sugar mills, but some are not crushing cane and have stayed closed for various reasons, including payment of liabilities. Most mills are owned by very influential people, and the provincial government cannot afford to annoy them.

In Tando Allahyar district, some cases have been reported where the police forcibly took cane-laden tractor trolleys to some sugar mills in the district that belonged to one of the powerful men. It was only after the farmers protested that this exercise was not repeated.

Shah says the government has given a huge subsidy of Rs10 per kg on export of sugar to millers, up from the historical range of Rs1.50-2 per kg. And yet, the farmers are still at the losing end. He says the government remains a silent spectator in the whole controversy.

Meanwhile, the PSMA has appealed to the Sindh Government to refix the sugar cane price at Rs155 per 40kg.

Published in Dawn, Economic & Business, January 6th, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play