LAHORE, Aug 20: Pakistan Sugar Mills Association (PSMA) drew the attention of the government on Monday towards “the worst emerging sugar and cane crises.” In a letter to Dr Salman Shah, adviser to Prime Minister on Finance, PSMA Punjab chapter chairman Ch. Zaka Ashraf said that the country was going to have a bumper cane crop next season, and the industry was likely to produce 4.3 to 4.5 million tons of sugar.

He said that the current minimum support price of sugarcane cannot be paid unless sugar was sold at an ex-mill rate of Rs32 per kg, inclusive of 15 per cent sales tax and one per cent special excise duty. The industry, he said, is likely to have surplus stocks, ranging between 300,000 tons and 500,000 tons out of next years’ crop.

If industry starts crushing from the first week of November, it would have a carry forward surplus of 200,000 tons from last year, which would take the surplus stocks to 500,000-700,000 tons next year.

“Unfortunately, in spite of domestic glut, the government is allowing unhindered flow of Indian sugar. If Indian sugar keeps on arriving through Wagha border, it will trigger a price crash in the domestic market because it costs $285 per ton, which is only Rs26.50 per kg.

In order to ensure start of crushing season by the first week of November, it is necessary that entire sugarcane crop is lifted on time and minimum support price of cane is ensured, and mills be allowed to sell their sugar by the first week of November.

The Trading Corporation of Pakistan (TCP) should only sell 100,000 tons between Oct 15 and Nov 15. No sugar should be sold by the TCP until Oct 15. This will enable the sugar mills to start crushing in the first week of November.

He further proposed that import of sugar from India must either be banned or import duty be raised from the 15 to 30 per cent.

Moreover, to enable the mills to pay minimum support price to sugarcane growers, the ex-mill sale price of Rs31-32 per kg must be maintained, the letter said.

If this price is not maintained, mills would neither be able to pay minimum support price to growers, nor they would be able to crush bumper sugarcane crop next year, the letter said.

He said that the industry is timely informing the government about the alarming situation and it is hoped that immediate corrective measures would be taken to bail the sugarcane growers out of the impending crisis.