WHILE the Sindh government has yet to announce the support price for sugarcane for this season, at least two sugar mills in the province have begun production and are buying the crop at last year’s unsubsidised rate.

The chief minister has so far failed to convene a meeting to resolve the controversy over the support price between the millers and the growers. In the meantime, there are reports that the provincial government may either keep last year’s denotified rate of Rs182 per 40kg for this season or notify a new price of Rs172. The subsidy of Rs12 given last year is no longer on the agenda.

The Matiari and Chambar sugar mills have already started crushing and are paying a rate of Rs160 per 40kg to farmers. The Sanghar Sugar Mills is also said to be preparing to go into production.

Also read: Sugarcane crisis

Two meetings between millers, growers and the Sindh agriculture minister failed to yield any results. The millers stuck with their offer of Rs160 per 40kg and expected the government to continue paying the subsidy of Rs12 per 40kg to farmers, just like last year.

The sugarcane growers want a price of Rs230, in sharp contrast to what the millers are insisting on. Official sources hint that Sindh is giving weight to the prime minister’s kissan package, under which a subsidy of Rs500 per bag has been announced for DAP fertiliser.

The SAB alleges that the crop’s price is fixed at the behest of the Sindh zone of the Pakistan Sugar Mills Association to please a few sugar factory owners, and that the chief minister has become totally irrelevant to the pricing issue

Taking this into account, the agriculture department has suggested that the provincial government retain last year’s price of Rs182 for the current season.

For the first time last year, the Sindh government paid a subsidy of around Rs4bn to millers to manage the crop’s price at Rs172 per 40kg. The growers had received no raise in the previous three seasons.

“The millers not only get sugar by crushing sugarcane but also get ethanol, molasses and bagasse as by-products. They even generate their electricity. Their intransigence in not paying the government’s fixed rate is beyond comprehension,” says Sindh Chamber of Agri­­culture General Secretary Nabi Bux Sathio.

He says average sucrose recovery in Sindh has been 9.5pc for the last 10 years, against the benchmark of 8.7pc. These figures were provided by the millers themselves to Sindh’s cane commissioner office.

Sindh Abadgar Board Vice President Mahmood Nawaz Shah says the Sindh agriculture research department asked him to submit details of the cost of sugarcane production. He claims it is Rs214 per 40kg and adds that the department must recognise the farmers’ assessment of expenses and share with the growers how it determines the production cost.

“We have been getting Rs172 per 40kg for three years — 2012-13, 2013-14 and 2014-15. And there is no official word about what our fate will be this year,” he says.

The SAB alleges that the crop’s price is fixed at the behest of the Sindh zone of the Pakistan Sugar Mills Association to please a few sugar factory owners, and that the chief minister has become totally irrelevant to the pricing issue.

The farmers in Punjab — where 3.32kg of sugar is produced from 40kg of sugarcane — get the price of Rs180, whereas growers in Sindh are paid Rs160 despite their higher yield of 4.2kg.

The Punjab government is reportedly waiting for Sindh to announce the support price first.

Last year, the millers had questioned the government’s authority to fix the price for sugarcane and insisted that the rate of sweetener should also be officially fixed and notified if the sugarcane price is determined by the government.

They are still involved in litigation in the apex court and the payment of the differential amount of Rs12 per 40kg is subject to the disposal of their petition on the same point.

Published in Dawn, Business & Finance weekly, November 16th, 2015