A HEALTHY sugarcane crop is now ready for harvesting but the cane price for the 2016-17 crushing season is yet to be fixed by the Sindh government.

The Sindh Sugarcane Commissioner’s office has already written to the provincial agriculture minister to hold a meeting of the Sugarcane Board to fix the support price.

However, the board will meet in Karachi on Sept 21 to discuss the issue of cane quality premium payment to growers under the orders of the Supreme Court.

According to the agriculture department, there has been an increase of 1.68pc in sugarcane growing area i.e. 318,060ha (target 320,000ha), up from 312,815ha of 2015 against the target of 320,000ha.

“The increase in the cane-growing area is attributable to growth in the sugar industry, in upper Sindh, and low cotton prices”, says an agriculture department officer. The cotton area in Ghotki district is now under sugarcane cultivation, as the four sugar factories set up there offer better price to farmers as compared to other sugar mills in the province.

Sindh’s sugarcane price is fixed at a higher rate because of greater sucrose recovery as compared to Punjab

Sindh Abadgar Board’s President Abdul Majeed Nizamani says the current sugarcane is pest-free. He hopes cane crushing will commence on time and pricing will be fair to help the growers get reasonable returns.

Currently, sugarcane producers are demanding Rs250-300/40kg. Last year, the pricing decision was announced as late as January, instead of September or October.

The SAB is demanding a price of Rs250/40kg and Mr Nizamani understands this rate won’t be fixed. Still, he argues, a justifiable rate should be set, given the market price of sweetener and the cane’s cost of production.

The government’s notification for downward revision of rate Rs172/40kg in 2015-16 from Rs182/40kg in 2014-15 has been challenged by the growers before the Hyderabad circuit bench of the Sindh High Court.

According to a wholesaler, Sikandar Rajput, the current wholesale price of sugar is Rs68/kg, though it was Rs52-53/kg three months back.

Sindh’s sugar factory owners argued last year that per kilogramme cost of sugar production did permit them to settle for a cane price of Rs200/40kg or even Rs182/40kg. The provincial government pitched in a subsidy of Rs1/40kg to millers to make up for a price of Rs172, as the millers were paying Rs160/40kg to growers.

SAB’s Vice President Mahmood Nawaz Shah argues that millers in their own litigation had admitted to Rs48/kg ex-factory sugar price and agreed to the cane price of Rs172/40kg in 2015-16. So, won’t it be logical with the current retail sugar price being Rs70/kg, the cane price should also be revised accordingly.

Sugarcane crushing is to commence from October 1 as per the Sugar Factories Control Act but this does not happen. Last year, the crushing started around December. According to an officer of the Sindh agriculture department, “We are waiting for Punjab to fix sugarcane price for upcoming season to determine our own position.”

Sindh’s sugarcane price is fixed at a higher rate because of higher sucrose recovery as compared to Punjab.

Sucrose recovery in Sindh’s cane is usually over the 8.7pc benchmark. There is a 0.50 paisa quality premium on per 40kg of cane. Millers expect, says an officer, the Sindh government to revise this benchmark, but Mahmood Nawaz Shah contends the growers are demanding payment of accumulating quality premium dues from millers which they had denied owing to litigation.

“We will discuss benchmark’s revision in meeting on Sep 21 but right now we are concerned more about the pending dues of quality premium which have been accumulating since late 90s, after we won the case in high court”, he says.

Published in Dawn, Business & Finance weekly, September 26th, 2016