Industry fears sugar mills ‘sealing’ may affect payment to farmers

Published September 27, 2021
The government claims that action against the sugar mills and their storages across Punjab has been taken in a bid to bring down prices of the sweetener in the open market. — Reuters/File
The government claims that action against the sugar mills and their storages across Punjab has been taken in a bid to bring down prices of the sweetener in the open market. — Reuters/File

LAHORE: The sugar industry claims that the government has sealed mills and their storage facilities and fears that the action will damage sugarcane growers when many mills will fail to pay them for the next crop.

However, Punjab Cane Commissioner Muhammad Zaman Wattoo has denied the industry’s claim, saying the mills or their storages have not been sealed rather sugar is being lifted from there at the price notified by the Ministry of National Food Security and Research (MNFS&R) the other day.

He justifies the action taken under the Punjab Sugar Supply-chain Management Order 2021 through deputy commissioners as the millers have been allegedly selling the sweetener at exorbitant rates in violation of the officially notified prices.

The government claims that action against the sugar mills and their storages across Punjab has been taken in a bid to bring down prices of the sweetener in the open market.

Cane commissioner denies report, says only sugar is being lifted on notified price

Pakistan Sugar Mills Association chairman Iskander Khan regrets that the government is importing sugar at Rs140 per kg, excluding sales tax, to sell it at Rs90 per kg in the local market but is not ready to procure the sweetener from the indigenous industry at Rs104 per kg.

“The government cares more for the foreign growers than the locals by offering heavy subsidies on the imported sugar,” he tells Dawn by phone. The federal government is importing 200,000 tonne sugar and 150,000 tonne of imported sugar will be distributed in Punjab at a rate of Rs90 per kg, he says.

Mr Khan fears that the government action may ultimately affect the local growers when the next crushing season is just weeks away and the mills are likely to default on payments to them for their produce due to cash shortages caused by the alleged sealing of the sugar storages.

The millers will decide their line of action in a general body meeting to be called soon, he says.

An official of the MNFS&R says that the action was necessitated when sugar millers began ‘draining out’ their stocks at the unofficial rates in the name of their earlier contracts with dealers/wholesalers.

Responding to a query, he says the step won’t affect the next crushing season as the authorities have contingency plans in place. He elaborates that the market will be flooded with the imported sweetener at Rs90 per kg rate, leaving a little chance for the local sugar to sell its produce at Rs100 plus per kg.

The officials believes that the cost of production of the mills established along Sindh’s coastal line is around Rs70 per kg as sucrose level in the sugarcane crop reaches a satisfactory level even during October.

He is sure that these coastal units will begin their crushing without accepting any dictation from the PSMA while many more mills elsewhere in Sindh and Punjab will also fall in line sooner.

Published in Dawn, September 27th, 2021

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