LAHORE: Sugar millers in Punjab owe around Rs10 billion as interest on delayed payments made to growers during the last decade.

“As per calculations done by my office, the sugar mills in the province cumulatively owe approximately Rs10 billion as interest on delayed payments made to growers during the last 10 years,” claims Punjab Cane Commissioner Mohammad Zaman Wattoo.

Talking to Dawn here on Friday, he said the Punjab Sugar Factories Control law bound the millers to pay growers interest at the rate of 11 per cent if the payment(s) was made 15 days later than the date of purchase.

He said that as the violation was non-cognizable until the promulgation of the Sugar Factories Control Ordinance on Sept 24, the mill owners had been taking the issue lightly and didn’t pay even a single penny as interest to growers for late payment.

“Since the law stands amended, now an FIR may be registered against the violators and the growers will be able to get what was due to them.”

Cane commissioner says law will be introduced to fix date for payment to sugarcane growers

Responding to a query about collection of payment data, he said most of the factories’ managements had also refused to provide data in violation of sub-section 10 of Rule 16 of the Punjab Sugar Factories Control Rules, 1950, and sought ‘refuge’ behind fundamental rights in a letter to the cane commissioner office.

He explained that the refusal to provide data had also been made a cognizable and non-bailable offence under the amended law.

He said to safeguard sugarcane growers’ interests vis-à-vis the start of the crushing season, the government had also decided to introduce a law to fix a date for the purpose on its own instead of leaving it to the millers.

“Vetting of the draft law has been completed and it is likely to be introduced through an ordinance within a couple of days.”

He said the date for start of the crushing season would be most likely fixed at Nov 15 each year and that its violation would warrant Rs5 million per day fine on the violator (mills).

The Pakistan Sugar Mills Association cries of discrimination in regulating the sugarcane sector arguing that the incumbent government is following a policy of ‘partial’ regulations whereby support price of sugarcane is fixed but the sugar industry is left at the mercy of market forces.

In a letter to the commissioner written on the day the new law was promulgated, a copy of which was shared with Dawn, the PSMA says cane crushing season of four months while sugar is kept in stores for its provision to consumers throughout the year, that means the investment remains stuck up for the whole year.

It argues that making payments to sugarcane growers within 15 days while sugarcane cost is 80 per cent of the total sugar production expenses will create a cash flow problem for the millers.

It says there was no payment issue until the government had been purchasing all the sugar stocks from the millers and then providing it itself to the market and during that period the industry had thrived — from four mills at the time of the Partition to around 100 at present.

It also bemoans of discrimination with Punjab mills for no such law exists in other three provinces.

Meanwhile, farmers question the logic that the millers have to sell the sweetener in installments throughout the year while they purchase the raw material, sugarcane, only in a four-month span.

“Is there any marketing mechanism in any other sector in the world where you purchase a commodity and make payment against it after years?” questions Khalid Mahmood Khokhar, president of Pakistan Kissan Ittehad.

He says in other countries payments are automatically transferred to bank accounts of growers at the time their sugarcane-laden vehicles are weighed at machines.

Moreover, he says when the government had acted against sugar stocks lying at some mills, their owners had pleaded that these were sold-out stocks and kept on behalf of the wholesale traders/buyers.

Published in Dawn, October 3rd, 2020