A meeting of Sindh’s cane growers and sugar mill owners chaired by the provincial agriculture minister in Karachi on Friday to settle the issue of sugarcane price remained inconclusive, with both sides sticking to their respective stance.

At the meeting of the Sugarcane Control Board, held following a directive of the Sindh High Court (SHC) issued earlier this week, both mill owners and cane producers refused to budge from their respective positions over the crop’s rate for the 2017-18 season.

A final round of the meeting will now be held on Monday as its outcome has to be reported to the high court, which is seized with the matter of fixation of price and purchase of sugar cane.

This year, Sindh is again witnessing a controversy over sugarcane rate which the provincial government notifies every season under Sugar Factories Control Act 1950. The belated announcement of the notified rate came on December 5, 2017, which should have been otherwise fixed in October or November as per practice and under the law.

Sindh government had notified a price of Rs182 per 40 kilograms for this year’s sugarcane crushing season. However, sugar millers in the province refused to accept the rate on the grounds that it is not viable for them given their cost of production and that they have huge carryover sugar stocks from the last season.

Sindh has a total of 38 sugar mills and this year 32 are functioning. Last year, 35 sugar mills had crushed 22 million tonnes of sugarcane as compared to nearly 18 million tonnes crushed in the 2015-16 season.

“The rate of Rs182/40kg is in no way viable for us given our cost of 1kg sugar production,” says Asim Ghani, who heads Pakistan Sugar Mills Association’s Sindh chapter. “We had been pressing the [federal] government before this year’s crushing season began, to allow us to export sugar without rebate but the government declined our request. When the government allowed the export, the prices of sugar dropped in the international market.”

According to Ghani, 500,000 tonnes of sugar had been exported for which Rs10.70/1kg rebate was allowed. He said this amount of subsidy has not yet been transferred to millers. Likewise, he said, more sugar is ready to be exported out of the 1.5 million tonnes okayed for export by the government.

The federal government had not allowed export last year to avoid any shortage of the commodity during Ramazan. Later, exports were allowed with a subsidy. Now the federal government has allowed a subsidy of Rs10.70 per kg for a cumulative export of 2 million tonnes of sugar.

Additionally, the Sindh government also announced a subsidy for millers of the province. According to a recent cabinet decision, the Sindh government approved a Rs9.30 per kg subsidy for mills which would export sugar. It, however, capped the quantity of the subsidy at 20,000 metric tonnes for each sugar mill.

Besides, under any federal subsidy, provinces share 50 per cent of the subsidy's cost. So, Sindh will also pay Rs5.35/1kg subsidy as part of the Rs10.70 rebate announced by the federal government last year.

The matter was taken to the SHC by sugar millers – Mirpurkhas sugar mills and others – when they challenged the December 5 notification of sugarcane rate for the 2017-18 season, saying the rate was not viable for them.

While fixing the interim sugar cane rate at Rs172/40kg, the high court had on Tuesday directed the government to convene a meeting within two days with all stakeholders and the cane commissioner, and notify the sugarcane price within one week.

During an earlier hearing of the case, the court had on December 21 ordered millers to pay Rs172/40kg to growers and deposit differential amount of Rs10/40kg with the court’s nazir. Following this order, the millers closed their mills instead of complying with the directives.

The millers had argued that they could not pay more than Rs130/40kg and if they kept their mills open they would be committing contempt of court, therefore, it was better to close the mills instead.

Growers are currently being paid the maximum rate of Rs130/40kg by the mills, whose owners insist they will not pay a price higher than that. Several mills are procuring the crop but not paying to growers yet, awaiting the final decision in the case by the high court.

Meanwhile, growers have ruled out accepting any rate less than Rs172/40kg.

Sindh Abadgar Board (SAB) vice president Mahmood Nawaz Shah told Dawn that Friday’s consultative meeting failed to bear any fruit and a final round of talks will be held on Monday.

“Actually, medium and small capacity farmers end up as major losers in this ongoing row," he said, adding that such farmers are hard-pressed to sell their crop even for a lesser price.

"They have already lost the chance to sow the wheat crop because they want to safeguard their 18-month-long sugarcane crop, for which they now need extra irrigation water flows that are not going to come handy in view of the water shortage already persisting,” Shah said.

Sindh Chamber of Agriculture leader Zahid Bhurgari said growers will not accept any rate other than Rs172/40kg as fixed by the Sindh High Court. He said today’s meeting clearly indicated that millers are in no mood to pay this price.