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Cane crushing picks up in Sindh

December 09, 2012

During the current season, as of December 3, only 16 mills out of 34 had started crushing sugarcane in Sindh, which delayed the harvesting and consequently wheat sowing.

However, despite controversy regarding prices, the millers are offering more or less Rs172 per 40 kg price of cane to farmers, the indicative rate set by the provincial government.

Small landholders are selling their cane to middlemen only to lose Rs2 to Rs3 per 40kg as they are not issued indent by mills.

Simultaneously reports from upper Sindh indicate that some mills are offering bulk suppliers Rs180 per 40kg. Such rate is usually offered to those farmers who supply cane in larger quantities.

This is in sharp contrast to sugar millers’ earlier claim that official rate fixed by government does not commensurate with the cost of sugar production. The millers are also required to pay quality premium to farmers if recovery of sugar from their cane is above benchmark of 8.7 per cent fixed for the province.

It is calculated at 50 paisa per pint of sugar recovery per 40kg cane. But as millers are in litigation with government at apex court level over quality premium issue since the last one decade, it is not paid to farmers.

PSMA Sindh zone chairman Aslam Farooq is not willing to clarify the indusrtry’s position, but Sindh secretary agriculture secretary, Agha Jan Akhtar, told this writer on November 20 that millers were earlier mulling to move the high court against fixation of sugarcane price.

However, so far no such litigation is reported to have been filed. Since November 20, the number of sugar mills which started crushing has risen to 16 from just three.

The millers had been demanding that, on account of carryover stock of 1.7 million tonnes, they should be allowed export of sugar.

Government in the first instance had allowed them to export 200,000 tonnes of which only 133,000 tonnes was exported until recently.

Then, on November 23 Economic Coordination Committee (ECC) allowed export of another 400,000 tonnes of sugar stock in view of bumper cane crop.

Cane growers have been insisting that government should fix cane price at Rs200 in view of their cost of production which has been worked out by them every year and presented to government on numerous occasions.

However, millers like Wajid Arain, who is former chief of PSMA Sindh zone and owns Ranipur Sugar Mills in upper Sindh, contends that not only the indicative price but sugar’s cost should also be fixed and determined in view of expenses incurred by millers. He is in agreement with farmers’ bodies that a moratorium should be announced over establishment of new sugar mills in Sindh given the fact that existing factories have the capacity to crush cane even if the current production is doubled.

He strongly calls for introducing a mechanism under which cost of sugarcane by-products, like bagasse or molasses, should be determined besides cane price. “While we are selling sugar at Rs48 ex-mill rate, the cost of sugarcane has been increased to Rs172 from Rs152 last year which is unjustified”, he contends.

Sindh Abadgar Board (SAB) general secretary Mehmood Nawaz Shah says that unfortunately PSMA never comes up with data of their cost of per kilogramme of sugar and other products’ expenses in any meeting whenever cane pricing is discussed.

The farmers, says Shah, are willing to share their cost of production on sugarcane as there is nothing to hide. “It is not understandable that you agree to various policy decisions in meeting of stakeholders but when it comes to implementing them you take a different position. What kind of paradox is this? Let us sit together and come up with solution”, he asks and adds that on the one hand, millers claim that their cost of production of sugar doesn’t commensurate with indicate price of sugarcane yet more sugar mills are established and are in pipeline in Sindh.

Belated commencement of cane crushing has become a regular feature in Sindh. Growers are always in a hurry to sell their sugarcane and prepare their land for wheat or winter crop sowing but millers avoid issuing them indent on time. Long queues of tractor trolleys’ carrying sugarcane can be seen outside sugar mills.

“Mill owners contend that sugarcane price of Rs172 per 40kg doesn’t suit them given current sugar price of Rs50 per kg in the market”, says Agha Jan Akhtar. According to him, millers had even resisted price of Rs101 per 40kg (fixed by government previously when apex court had fixed Rs40 per kg sugar price). .

Cash-starved farmers are even ready to sell sugarcane at Rs172 without pressing for Rs200 as they suffer from lack of cash flows after failing to get adequate price for their cotton crop this year. According to them instead of stirring up crisis every crushing season the millers should devise a strategy that shouldn’t discourage farming community from cultivating sugarcane.

The sooner PSMA agrees to a formula that determines the cost of sugar and sugarcane every year the better for the sugar industry and farming community.