Sugarcane support price for the current season has been fixed at Rs170 per 40kg for the growers in Punjab, up from Rs150 per 40 kg in the last season. Support price for Sindh would be fixed shortly, maybe by the time one reads these lines.

In all likelihood the new price would be higher than the one announced for Punjab growers. Last year the Sindh government had offered Rs152 per 40kg to cane growers in this province.

Normally support price for sugarcane in Sindh remains a little higher than that in Punjab because cane grown in the province contains a higher percentage of sucrose. “But this year is the election year. If Sindh wants to get political mileage over Punjab in this area, you’ll see the new cane support price go up to Rs175 per 40kg instead of Rs172 per 40kg,” says a source privy to the meetings held so far for fixation of cane support price.

Cane growers in Punjab have rejected the new sugar cane support price. President of Kissan Board, a growers lobby group, demanded that the new price should not be less than Rs280 per 40kg.

He warned of legal action against the provincial authorities if they fail in reconvening a meeting of all stakeholders to discuss the issue afresh. Chairman Agri Forum, another growers lobby group, said the new minimum procurement price of cane should be increased to Rs225 per 40kg pointing out that the provincial government had itself accepted that the input cost of cane growers is no less than Rs164 per 40kg. He feared that if cane support price was not increased to a level that satisfies growers, it would force them to switch over to other crops in the next season thus affecting growth of cane production.

Though the increase in cane support price being demanded by growers is very hard to be accepted by all stakeholders particularly the government and the sugar mills, the demand itself can be exploited politically and otherwise causing delay in sugarcane crushing.

Sugarcane crushing is supposed to start in November in Punjab and in mid-October in Sindh.

In case of Sindh, cane crushing has already been delayed and even if new cane price is announced by the time these lines appear, growers of this province too are expected to initially protest over the new price toeing the line taken by their fraternity in Punjab.

Then by the month-end Baqra-Eid would fall causing further delay in the second round of negotiations. So, in all probability, cane crushing in Sindh does not seem to be starting anytime before mid-November even if all rough edges of policymaking are smoothened swiftly.

And in Punjab, where the situation is more volatile because of the simple fact that the top government leaders themselves are sugar millers and their actions are seen with suspicion by growers, cane crushing may be delayed up to December. Who will benefit by this delay, by the way. Of course, sugar millers who are sitting on piles of previous years’ stocks and want to exhaust these stocks first before they can begin sugar manufacturing afresh.

What has irked sugarcane growers most is that the new cane support price of Rs170 per 40kg is even lower than Rs177 per 40kg recommended by the Punjab agriculture department a few weeks ago. A federally-run agricultural institute had contested had recommended Rs175 per 40kg and that had prompted a reexamining of the earlier recommendation of the provincial agriculture department.

Growers say that now the fixing of Rs170 per 40kg as new support price clearly shows that the provincial bureaucracy has succumbed to the pressure of powerful sugar millers’ lobby as members of ruling political party in Punjab also owns sugar mills.

Sugar millers say that they still have more than a million tonnes of unsold stocks of sugar. They complain that even after the October 3 decision of the Economic Coordination Committee of the cabinet to allow additional sugar exports of 200,000 tonnes, the State Bank of Pakistan announced the procedure for exports on October 19.

“We have still not exhausted the previous quota of 200,000 tonnes (announced before October 3) and exports under the new quota can not start before next week as the SBP has issued a circular (detailing the procedure of the exports under new quota) just today (October 19),” said a Karachi-based sugar miller.

“Farmers demanding fabulous support prices of Rs280 or Rs225 per 40kg are doing no good to their community. We are going to have a bumper crop of sugarcane this year, maybe exceeding 60 million tonnes. Sugarcane prices are bound to remain low due to over-supply. I don’t think that the new support price of Rs170 per 40kg is too low against that of Rs150 per 40kg of last year,” he said but hinted that the price may be revised upwards by a few rupees per 40kg to appease protesting growers.

Data released by the Pakistan Bureau of Statistics show that 93,570 tonnes of sugar was exported in the first quarter of this fiscal year, between July and September 2012. Millers say that even if the October figures are included the total exports would remain below 200,000 tonnes mark, the initial total export quota allocated for exports before October 4.

That a sugar glut exists is evident from the fact that sugar prices have been stable in local market for several months in a row. Now that the international prices have also stabilised, sugar millers are in problem. Exporting sugar is not going to earn them big money and selling it in domestic market has stopped fetching high margins. Millers say that it would take them at least three months from now to exhaust the presents sugar stock..

Here lies the point. Whereas anything that causes delay in sugarcane crushing suits the millers for it would help them begin sugar manufacturing at a time when there would be no or little carryover stocks, growers cannot afford a delay in cane harvesting because that compounds their financial problems.

Ideally the government should ensure that cane crushing starts as soon as possible so that fresh sugar supplies come into the domestic market when some of the carryover stocks of last year’s sugar remain in place. That is the only way to keep domestic sugar prices stable.

One can only hope that the government would act swiftly to resolve the current grower-miller tussle over cane pricing. —Mohiuddin Aazim