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Centre spars with Sindh as sugar crisis escalates

Updated January 05, 2018

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Sugarcane growers in Hyderabad rally on Wednesday against refusal of mills to pay the notified price for their crop. Rallies of this sort have swept towns across Sindh, reaching Karachi in recent days where they have been joined by the PTI as well.
Sugarcane growers in Hyderabad rally on Wednesday against refusal of mills to pay the notified price for their crop. Rallies of this sort have swept towns across Sindh, reaching Karachi in recent days where they have been joined by the PTI as well.

ISLAMABAD/KARACHI: Min­is­­ter for National Food Security and Research Sikandar Hayat Khan Bosan said on Thursday the federal government has nothing to do with the sugarcane crisis in Sindh.

Providing farmers with the subsidy is the provincial government’s responsibility, Mr Bosan said at a news conference.

“The allegation levelled by the Sindh government that its federal counterpart did not provide the subsidy on sugarcane is wrong and baseless,” he said.

Subsidy provision is the responsibility of provincial govt, says federal minister

“It is the responsibility of the provincial government to ensure that farmers get the fixed price,” he said, adding that he will speak to the Sindh chief minister in this regard.

Mr Bosan said it is the responsibility of Sindh, Punjab and Khyber Pakhtunkhwa governments to ensure that farmers get the support price against sales of sugarcane.

The price of sugarcane is determined by the provinces in consultation with the federal government, he said.

The federal government pays the subsidy only on the export of sugar, and not on sugarcane purchase by mills, as being claimed by ministers in Sindh, he added.

The government has allowed mills to export 1.5 million tonnes of sugar, Mr Bosan said, noting that the Trading Corporation of Pakistan will also purchase 300,000 tonnes of surplus sugar.

As per the decision of the Economic Coordination Committee of the cabinet, the federal government is providing the subsidy of Rs10.70 per kilogram for the export of sugar.

The provincial governments have to pay subsidies to farmers under their respective Sugar Control Acts. The problem in Sindh is not new, he said, adding that it has existed for the past several years. Sugarcane growers in Sindh are to be paid Rs182 per 40kg, but they are not getting this price, he said.

The country has so far produced 7.5m tonnes of sugar this year against domestic demand of 5.3m tonnes. In terms of sugarcane, production has been 85m tonnes, up 12.5pc from a year ago.

Representatives of Sindh-based sugar mills claim that they face a crisis-like situation. They said the price of sugar is Rs47 per kg, including sales tax of Rs6 per kg. This brings the payable cane rate to Rs120 per 40kg. They said sugar mills are in no position to run a loss of Rs20 per kg of sugar as each of them will incur a loss of up to Rs1 billion.

They are of the view that mills suffered huge losses last year due to the late approval for sugar exports by the federal government. The federal government has still not paid the last year’s subsidy on exports, they said.

The minister announced that the government has released Rs100m as the first instalment of the sugar export subsidy, adding that a notification has also been issued.

Meanwhile, State Minister for Economic Affairs and Finance Rana Afzal Khan said in Karachi National Bank of Pakistan (NBP) should ensure credit availability for the sugar industry.

“We have discussed the sugarcane crisis, but no final decision has been taken to resolve the issue,” the minister told Dawn.

“I believe that the sugarcane industry should be provided with credit so that farmers get paid against their crop,” he said.

“Banks are the biggest supplier of credit to agriculture and NBP is one of them. We are trying to resolve this crisis with the support of banks,” said the minister.

Published in Dawn, January 5th, 2018