Sugar sector stakeholders at loggerheads over cane price

Published January 10, 2021
A stalemate persi­sts between sugar mills, far­mers and government auth­o­rities on the value of sugarcane. - Photo by Umair Ali/File
A stalemate persi­sts between sugar mills, far­mers and government auth­o­rities on the value of sugarcane. - Photo by Umair Ali/File

ISLAMABAD: As consu­mers continue to suffer from high prices of various commodities, a stalemate persi­sts between sugar mills, far­mers and government auth­o­rities on the value of sugarcane.

The middlemen, on the other hand, were earning significant profits due to the new law that required payments through bank accounts only.

Minister for Industries and Production Hammad Azhar on Saturday acknowledged that sugar prices were once again on the rise and said the government was co­n­­sidering abolishing imp­ort duties on raw sugar to ensure adequate stocks in the country at reasonable prices.

Speaking on a private TV channel, the minister said his ministry would forward a summary to the Economic Coordination Committee (ECC) in this regard.

He accepted the enhan­ced role of the middlemen in cane purchasing and said the provincial governments had been directed to eliminate this practice.

He said that in order to stop hoarding, cameras wou­ld be installed in sugar mills by the Federal Board of Rev­e­nue to remain in the know of the production data.

Meanwhile, Pakistan Sugar Mills Association (PSMA) chairman Iskander Khan has written a letter to Prime Minister Imran Khan in which he has highlighted the sugar price issues and called for measures to stop smuggling of sugar and jaggery (gur) to Afghanistan and Central Asia to stabilise the local markets.

The PSMA said the federal government had to implement the Gur Control Act 1948 which allows only 25 per cent of the sugarcane for jaggery production.

“However, currently around 100 per cent of the sugarcane in Peshawar valley is diverted to Gur making, with most of it smuggled out of the country,” the prime minister was informed in the letter.

These issues were discussed at a recent meeting of the Sugar Advisory Board that witnessed barrages of accusations from all sides, while the sugar millers expressed their frustration over the government’s failure to ensure smooth supply of sugarcane on the support price of Rs200 per 40kg.

They warned that if the government failed to fulfill its commitment, the country might see an increase in price of the commodity in the coming weeks.

After a decline in the past month, sugar prices have increased by Rs5-6 per kg in different markets during the past week while the retailers have expressed concerns over the volatility in the market.

“At present, the retail price has reached Rs95 per kg with the wholesale cost of Rs90, however, the markets are swirling with rumours that prices might rise up to Rs100 per kg,” Karachi Retail Grocers Group Chairman Fareed Qureshi said.

On the other hand, the major players have failed to reach a solution and the sugar advisory meeting, chaired by Minister for Industries Hammad Azhar, remained inconclusive.

Sources said the meeting was informed that instead of the government fixed sugarcane support price of Rs200 per mann (40kg), the current rates were Rs300 in Sindh, Rs270–Rs290 in Punjab and Rs290 in Khyber Pakhtunkhwa.

The Ministry of Industries has made calculations that the retail price of sugar should be between Rs75 and Rs80, based on cane price at Rs200 per mann.

Meanwhile, the Sindh cane commissioner acknowledged that the rates were over Rs300 in the province due to shortage of cane this year, claiming that “this will benefit the farmers too”.

At the same time the participants agreed that a new class of middlemen was present near the sugar mills due to the law that made it mandatory for sellers to have a bank account which most farmers did not.

A Rahimyar Khan-based farmer, Hakim Ali Baloch, said bank account was an issue and said new regulations required “cane purchase receipts (CPR) to be issued to growers by the mills and amount to be paid through banks”, adding that, “many people did not have an account, with one reason being that it was a hassle as the bank is around 20km away”.

Eventually, the local middlemen end up purchasing the sugarcane from farmers on cash and sell to the mills keeping their margins and thus increasing the cost of raw material for the sugar mills.

Meanwhile, sources said respective cane commissioners did not assure the meeting of smooth supply to mills.

On the other hand, an official of the industries ministry said raw sugar prices were high in the international market and after refining the ex-mill cost would be around Rs90 per kg.

The PSMA members expressed their concerns that sugarcane was not being supplied to the mills on the official support price.

The association demanded that in order to bring down sugar prices, the government should abolish 17pc sales tax on refined sugar as it was being done in case of flour and pulses.

Responding to the query, the PSMA chairman said on one hand the government wanted to reduce sugar price while on the other, it was shying away from its responsibility to cut down the role of middleman and ensure supply of sugarcane to mills at a price fixed by the government.

On the other hand, Federal Minister Hammad Azhar told the meeting that if the provincial authorities failed to reach any consensus with the sugar mills, there would be no option but to import either raw sugar for processing in the mills or import refined sugar and sell it at subsidised rates to consumers through utility stores.

Published in Dawn, January 10th, 2021

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