ISLAMABAD, Jan 28: Sugar mills are putting pressure on the caretaker government to buy at least half a million tons of sugar from them at higher rates and export it in order to increase the domestic price by curtailing the supply to the market.
Insiders told Dawn that a delegation of the Pakistan Sugar Mills Association (PSMA) met caretaker Prime Minister Mohammedmian Soomro last week and informed him that the sugar mills had decided to hold back payment of over Rs20billion to farmers this season if the ex-mill price of sugar was not raised to Rs29-30 per kg from the existing Rs22-23.
They said the millers had presented to the prime minister and the Ministry of Food, Agriculture and Livestock (Minfal) a plan under which the government should buy at least 500,000 tons of sugar from the mills through the Trading Corporation of Pakistan (TCP) at the ex-factory price of Rs29-30 per kg and start exporting it.
This is likely to cost the government over Rs50 million keeping in view the international market which is lower than what the government would pay to the millers.
Sources said if the government bowed to the pressure, retail prices of sugar in the domestic market would shoot up to Rs36-38 per kg from the existing Rs28-30.
The mills have also informed the government that they will not be able to pay the officially-fixed price to the farmers not only in Sindh, but also in Punjab and the NWFP if the ex-factory prices are not increased within the next few weeks.
They say that a “reverse crisis” has hit the industry over the past two months causing prices to drop below the cost of production level, lowering the margin of profit.
The sources said the mills had also threatened to stop buying sugarcane from growers on the pretext that the below minus temperature had hit the cane growing area last week and had affected the sucrose level in the cane due to “bacterial inversion”.
Sources in the Minfal told Dawn on Monday that farmers in Sindh and parts of Punjab were now so scared that they had started selling cane on weigh bridges to middlemen at as low as Rs45 to 50 per 40kg.
The government had revised the official sugarcane price downward to Rs65 in Sindh from Rs67 and Rs60 in Punjab from Rs65.
Now even the revised prices are not being paid to farmers despite the fact that cost of cane production has increased manifold over the last couple of years. A strong reaction is expected from the growers in coming weeks.
They said thousands of farmers in Sindh and Punjab were unable to harvest their crop before the first week of January in order to sow wheat on the same land.