KARACHI, July 21: Sugar mills have agreed to pay Rs2.5 billion cane dues to growers by Aug 15.

Those failing to make the payment would have to pay 18.5 per cent mark-up.

This was agreed between the mills and agriculture department in a meeting chaired by Agriculture Secretary Subhago Khan Jatoi.

Sindh Cane Commissioner Nazeer Hassan Jamali told Dawn on Monday that it was agreed that the mills would clear dues accruing from the difference in minimum purchase price of Rs63 per maund. He said the minimum price was reduced to Rs63 from Rs67 at the mills protest, which said that unless the TCP buys 500 tons sugar, they would not accept the minimum price. Even at the reduced price, the mills bought cane at the rate of Rs57 per maund which resulted in accumulation of Rs2.5 billion dues.

It was also decided that issue of payment of differential price from the minimum price of Rs67 per maund would be raised with the government, which the mills said backed out from its promise of buying sugar from the mills.

The agreement came after the cane commissioner filed cases against nine defaulting mills under the Sindh Sugar Factory Ordinance, which entails two-year jail term along with heavy fine to owners who fail to clear dues after one week of the receipt of the cane.The Sindh Abadgar Board has welcomed the agreement and expressed the hope that the mills would fulfill their commitment to clear the way for smooth functioning of the next season, which is due to start from October.

SAB president Abdul Majid Nizamani said that bumper sugarcane crop last year created problems for growers, who did not receive reasonable price for their produce from sugar mills. He expressed the hope that new cane purchase price would be fixed taking into account all costs, especially high prices of fertilisers and pesticides.

In reply to a question, Mr Jamali said that new crop harvest is expected in October but this year estimates are about 15 to 20 per cent less than the previous crop.

Many growers opted for other crops because of non-payment of dues from mills as well as less than expected rates offered to them.

He said though the minimum price fixed by the government was reasonable, the mills refused to pay the price on the condition that the TCP should be first directed to buy 500 tons of sugar from their old stocks.

Meanwhile, the Agriculture Price Commission, which held its meeting in Islamabad, has estimated cost of sugarcane production in Sindh at Rs70 per 40kg compared to Rs68 in Punjab and Rs60 in the NWFP.

Growers in Sindh have pinned hopes for a minimum cane price above Rs70 in view of the cost of production calculated by the price commission. The minimum cane purchase price is expected to be announced before the start of the new season.