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Sugarcane: Indicative price may be fixed at Rs170

October 23, 2012

Farmers carrying sugarcane on their heads on the way during harvesting the sugarcane crop in their fields. – APP (File Photo)

LAHORE, Oct 22: The Punjab government may announce indicative price of Rs170 per maund for sugarcane on Tuesday (today), removing major hurdle in start of the crushing season this year.

According to sources in the department, a meeting of the Sugarcane Development Board – comprising farmers, millers and government officials – had considered all proposals by the Punjab Agriculture Department and Agriculture Policy Institute for the price. The agriculture department has calculated cost of production at Rs143 per 40kg. After adding around 20 to 25 per cent investment incentive on it, it recommended a price of Rs168 for the year.

The federal government, on its part, had calculated Rs149, added 10 per cent incentive, and suggested average price of Rs164 per 40kg for the Punjab. The Punjab Food Department, however, moved a summary of Rs175 per 40kg, considering last three years’ practice of increasing cane price by Rs25 every year, regardless of cost of production. These prices were meant for a debate on the issue, because all of them were recommendatory for the Sugar Development Board and didn’t bind the board to any one of them.

The provincial government, however, decided to fix indicative price at Rs170 per 40kg – rounding off the agriculture department’s proposal of Rs168 per 40kg at the nearest rounded figure. “This is just an indicative price, which will just kick off the season,” says an official of the Punjab government. Once actual crushing starts and gains momentum, the price is bound to go up, as has been the case for the last few years. Last year, the price was Rs150 per 40kg but the market touched Rs250 per 40kg.

“Just to keep the option of such a hike open, the Punjab government calls it indicative, not support, price,” says an official of the department. An indicative means just a consensus baseline, which all stakeholders – farmers, industry and the provincial government – decide to start the crushing season with, and leave rest to the market forces, he said.

According to him, the Agriculture Policy Institute of the federal government had warned provinces against increasing indicative cane price, considering carryover stocks, international import-export parity and the crop size, which may throw up yet another load of surplus sugar.