AS like in the past, the start of sugarcane crushing has remained in limbo this year too. Back-to-back meetings between the agriculture minister, growers’ leaders and millers remained inconclusive until Nov 17.

The delay is mainly due to millers’ insistence on a raise in federal subsidy on the export of sugar.

At a Nov 16 meeting, Sindh Agriculture Minister Sohail Anwar Siyal failed to persuade influential millers to start crushing for this season. He instead proposed that growers should agree to a notification for the crushing season and get sugarcane rate fixed later on.

Farmers’ leaders rejected the proposal outright, arguing that accepting it would amount to withdrawing from their right to demand sugarcane’s minimum price before crushing starts, and that it would set a precedent for future decisions.

They want the Sindh government to fix the sugarcane price at Rs182 per 40 kilograms. The Punjab government has already notified a price of Rs180 per 40kg for the 2017-18 season.

However, Mr Siyal — who heads the Sindh Sugarcane Control Board, formed under the Sugar Factories Control (Sindh Amendment) Act of 2009 — adjourned the meeting to discuss the matter with the chief minister before convening the board’s meeting again.

If provisions of the act are anything to go by, the start of the sugarcane crushing season could not be linked to sugar exports.

The act, according to a Sindh government official, primarily calls for protecting growers’ rights, fixing cane’s price and recovering cess from sugar factories, but it has nothing to do with domestic or global market prices of sugar.

The indicative price of sugarcane had always been announced in October from the 1990s to 2006-07, except for 2002-03 and 2003-04 seasons when it was notified in mid-November.

Even after the amendment in 2009, the act calls for the start of crushing not later than Nov 30.

Delayed wheat sowing

Sugarcane is grown on around 600,000 acres in Sindh. A delay in its harvest leads to delayed sowing of wheat and other Rabi crops. Therefore, if sugar mills had started crushing in early November, around 150,000 acres would have been freed for other crops.

Sugar millers say they delay crushing because the cane crop doesn’t mature in October. But it’s a “lame excuse”, says Mahmood Nawaz Shah, vice-president of the Sindh Abadgar Board. “We have been deprived of our right when to harvest our crop,” he complains.

Crushing is not expected to begin before early December this time around, because even if the Pakistan Sugar Mills Association (PSMA) agrees to the growers’ price, factories will need at least a week to fire boilers.

The PSMA argues that crushing couldn’t be started soon as the unsold buffer stocks of sugar — estimated to be around 500,000 tonnes until mid-November — are putting a crunch on millers.

Political dimension

For the last several years, Sindh has witnessed a row between millers and growers over sugarcane rates. Growers point out that because those at the helm in the Sindh government since 2008 own mills themselves, they try to undermine legitimate interests of growers.

Even police have been used in the last couple of years to divert sugarcane from fields to certain factories, leading to a row between the Sindh government and the provincial police boss.

“Sugarcane crop now has a pure political dimension in Sindh due to conflict of interests of government and millers,” argues Sindh Agriculture Research Council’s Ali Palh, who has filed a petition in the high court to get sugarcane rates fixed for the current season. “A certain group of millers connected with the government is dictating its terms.”

Sindh, which makes substantial contribution to Pakistan’s agrarian economy, has witnessed a sudden rise in the number of sugar mills — from 32 to 38 — in last few years. Most mills have been set up in areas known for cotton cultivation.

‘We can’t recover costs’

Around 22 million tonnes of sugarcane was crushed in the 2016-17 season in Sindh against 17.82m tonnes a year ago. Sugar production stood at 2.23m tonnes in the outgoing season as compared to 1.89m tonnes in the preceding year. The increase was attributed to a rise in supplies from Punjab.

The PSMA wants the federal government to increase the sugar export subsidy from Rs10.70 per kg to up to Rs19.

The Sindh chapter of the association has cautioned the provincial government through advertisements that if it failed to get the subsidy, it won’t be able to pay more than Rs125 per 40kg to growers.

“A bumper crop [of sugarcane] is expected this year too, and we anticipate surplus sugar stocks of around 8m tonnes in the country,” PSMA Sindh chairman Asim Ghani says. “Therefore, exports should remain open.”

He contends that the cost of sugar production varies between Rs60 and Rs62 per kg, while the ex-factory price of sweetener remains Rs47, inclusive of Rs6 federal duty which means millers get around Rs40. “We can’t even recover the sugarcane cost [i.e. Rs182 per 40kg],” he remarks.

However, Nawab Zubair Talpur, brother of PPP’s MNA Nawab Yusuf Talpur and president of the Sindh Abadgar Ittehad, doesn’t rely on the stock figures released by the PSMA, and says the provincial government should carry out its own survey to determine the actual figure.

Published in Dawn, The Business and Finance Weekly, November 20th, 2017