HYDERABAD: A tough competition is being witnessed among sugar mills in the procurement of sugar cane in view of the high rates of sugar prevailing in the retail market for several weeks.
Around 19 sugar mills have either commenced crushing season or lit up their boilers in Sindh although the official procurement rate of sugar cane crop for the season has not been notified by the Sindh government.
The rest of the mills are likely to start crushing when rate is notified.
According to the Sugar Factories Control Act, cane crushing has to be started not later than Nov 30 every year. Official sources said that Sindh agriculture department has proposed a rate of Rs202/40kg when compared with Punjab’s Rs200/40kg.
Farmers confirmed that millers are currently paying Rs200 to Rs230 per 40kg to cane producers in different areas. In fact the rate varies in different areas every day.
According to Dr Irfan Gul Magsi, who is co-owner of a sugar mill in Tando Allahyar, Chambar Sugar Mills offered Rs230 per 40kg to farmers on Monday. “The rate changes every day,” said Dr Magsi, who is associated with the ruling PPP and was elected MPA from the district in 2002. He himself is a sugar-cane grower.
Sindh’s cane crop’s sowing target this year was missed by around 8pc as the crop was grown on 288,000ha against the set target of 310,000ha. In 2019-20 season also, the target was missed by 7.7pc. It was only in 2016-17 and 2017-18 that sugar-cane crop had recorded an increase in acreage by 0.2pc and 4.1pc, respectively. In 2018-19, the crop recorded a 13.2pc decline in sowing area.
The Pakistan Sugar Mills Association (PSMA) had informed Agriculture Minister Ismail Rahu in a meeting, which was also attended by growers for discussing cane’s rate last month, that sugar-cane production was 12pc higher than last year.
Growers did not buy this argument and this is also supported by Sindh agriculture department’s figures which put cane crop’s acreage at less than the targeted sowing. Farmers still contend that sugar-cane crop’s acreage has not increased from last year. Farmers believe that since sugar factory owners realise that sugar-cane acreage has not improved this year, they would keep jacking up cane crop’s procurement rate so that they could sell sugar accordingly in the market.
Sindh Abadgar Board (SAB) vice president Mehmood Nawaz Shah argued that the mills based in southern Sindh were offering a rate of Rs240/40kg whereas those in northern Sindh were still offering not more than Rs202/40kg, a price that is likely to be notified by Sindh government as sugar cane indicate rate for the 2020-21 season. He said that there was a drop in cane sowing area this year.
Sindh Chamber of Agriculture (SCA) vice president Nabi Bux Sathio subscribes to SAB official’s views that sugar cane acreage is not higher than last season. He, however, confirms that the Digri Sugar Mills procured cane crop from Tando Mohammad Khan at Rs284 per 40kg, exclusive of transportation charges. “If I am selling my sugar cane crop at Rs284, this means that Rs262 will be paid to me after a deduction of Rs22 as transportation charges by the mills concerned,” he said.
According to him, the mills in Thatta have to start crushing and they have been told that if they anticipate getting the crop at Rs202/40kg, they would be daydreaming. “If we are selling our crop for over Rs250/40kg then nobody is going to supply crop for Rs202/40kg,” he said.
The SAB leader pointed out that millers themselves jacked up the cane price as there was a lot of speculation about retail price of sugar and millers want to capitalise on it by purchasing more and more cane stocks to produce maximum possible sugar and to earn an extra buck.
He said that that even federal government had admitted that when Rs192/40kg cane rate was fixed, sugar’s retail price was Rs53 to Rs56 per kg. So, he said, if sugar’s retail rate was calculated at Rs105 to Rs110 per kg today in the market, then sugar cane crop should have been sold to mills for over Rs300 per 40kg. “If sugar price increases, it means rate of sugar cane’s by-products will increase too, and this is an added advantage for millers”, he said.
SAB had presented a cost of Rs225/40kg for the fixation of sugar cane rate in 2020-21 and it is inclusive of 20pc profit of farmers. The cost of production was calculated after assessing cost of input in the market.
Published in Dawn, November 17th, 2020