HYDERABAD: With sugarcane price at a dismal low of Rs155 per 40 kilogrammes and manifold increase in production cost, growers feel themselves caught between the devil and the deep blue sea.
If they accept the low price the government fixed as an ‘interim minimum price’ on Dec 3, 2014, it barely covers their production cost. And if they refuse and let the cane standing in fields, it only adds to their liabilities as the cane loses weight by each passing day.
The government had first fixed the cane price at Rs182 per 40kg but soon revised it downwards to Rs155 under pressure of the powerful and influential sugar millers lobby.
The present crisis — which hit the headlines when opposition parties joined growers’ protests — has been brewing since October last year. The controversy over cane price is created by mills each year just before the start crushing season. What is different this year is that the mills took the issue to the high court and then the apex court in a bid to deny farmers the government-fixed price.
“We have reason to believe that the government is hand in glove with the millers,” said Mahmood Nawaz Shah, vice president of the Sindh Abadgar Board, a vibrant growers’ organisation.
“The agriculture minister met us on Oct 28, 2014, to decide the cane price. We only pressed the point of timely commencement of the crushing season and did not press for the price, for we understood that Punjab had fixed the price at Rs180 per 40kg and now the Sindh government was bound to fix it at Rs182 at the minimum,” he said.
Sugarcane price in Sindh remains a bit higher than that of Punjab because of more sucrose content in Sindh’s cane. The government had fixed Rs172 for 2012-13 and kept it unchanged in 2013-14 because Punjab had retained the price at Rs170.
On Nov 7, 2014, the Sindh government fixed the price at Rs182 only to revise it downwards to Rs155 on Dec 3, 2014, and restored the Nov 7 notification on Dec 9.
By then the millers had moved the high court, challenging the government’s authority to fix the cane price under Section 16 of the Sugar Factories Control Act, 1950 without involving growers in the case as respondent.
The millers want the government to fix sugar price too. On the court’s directives the Sindh government officials met their federal counterparts only to be reminded that agriculture had now become a purely provincial subject under the 18th amendment to the Constitution.
Currently, wholesale price of sugar is close to Rs50 per kilo while the Economic Coordination Committee has allowed export of 650,000 tonnes of carryover sugar stocks with a subsidy of Rs10 per kilo.
“The millers refuse to give Rs182 per 40kg to growers and offer Rs155 as per Dec 3 notification as the government created an opportunity for them to take their case to courts,” said Sindh Chamber of Agriculture general secretary Nabi Bux Sathio.
The Sindh High Court rejected their petition and set aside the Dec 3 notification as well after which the millers went to the apex court which has not issued any restraining order on the price.
“Logically, morally and legally the millers can’t deny the Rs182 price but the government is least interested in implementing its decision,” he said.
In a move which appeared only to add fuel to the fire, the Sindh zone of the Pakistan Sugar Mills Association placed an advert in newspapers on Jan 2, announcing suspension of crushing after Jan 5.
The announcement drew a strong response from farmers and they resorted to agitation, which was soon joined by the opposition and nationalist parties.
“If the millers cannot afford to offer Rs182, it’s okay but where has this Rs155 rate come from. Our cost of inputs is in black and white but is there any third party assessment of millers’ claim? Why don’t millers talk about byproducts of cane like molasses, ethanol and bagasse,” said Mr Shah.
Mr Shah believes the mills sell energy to the government which they produce from bagasse and thus earn an additional revenue of between Rs250 million to Rs300 million, depending on the crushing capacity of a mill.
At a Jan 8 gathering of growers an ultimatum was issued to the government, asking it to ensure start of crushing within three days. The mills did start the crushing after that but refused to pay Rs182 price.
At the Jan 27 sit-in on the Superhighway which was led by political leaders, former Sindh chief minister Arbab Ghulam Rahim publicly claimed that half of Sindh’s sugar mills were controlled by Omni group which was owned by former president Asif Ali Zardari, hence the monopoly on sugar trade. The famers announced they would hold another protest on Feb 11.
Mr Shah asked: “Why is sugar industry flourishing in Sindh? Why don’t millers talk about price issue before October? Why
do they raise it at the 11th hour when it is harvest time?” he asked and answered himself that “it’s because recovery of sucrose content crosses benchmark ratio by December and average recovery remains between 9.5 per cent and 10 per cent,” he said.
Out of a total of 37 sugar mills, 33 are crushing sugarcane while the rest remain shut for mechanical faults, according to Sindh Cane Commissioner Agha Zahiruddin.
He said that his office could send a reference to a sessions court against any mill violating the law and the court then could impose a fine of Rs100,000 or imprisonment or both under the law.
Published in Dawn, February 6th, 2015