ISLAMABAD, June 9: The Ministry of Food, Agriculture and Livestock on Monday directed the Pakistan Sugar Mills Association (PSMA) to clear the outstanding dues of sugarcane growers by June 30.

Mills can be “blacklisted” if they failed to meet the deadline, the food ministry warned.

The millers have conditionally agreed to start payment to farmers for last year’s crop, rather by the end of July and that too if the government procured at least 150,000 tons of sugar from mills through the Trading Corporation of Pakistan (TCP) on higher than market rate in the next couple of weeks.

The PSMA and the food ministry have differences over payment of around Rs40billion to sugarcane growers.

Sources told Dawn that a meeting here between the officials of PSMA and Minfal over the deadline of payments to farmers remained inconclusive. The meeting was chaired by Federal Food Minister Chaudhry Nazar Mohammad Gondal.

“We can’t pay to mills until the government starts buying sugar from us,” a PSMA official, who attended the meeting, told Dawn but requested not to be named.

He said the association was not in a position to get loans from banks to pay it to farmers. He said the State Bank of Pakistan (SBP) last month increased interest rate for the running capital to 15pc from 12 pc, and the millers would never loan money at such a high rate of interest.

Minfal on the other hand expressed its concern over problems being faced by farmers due to inability of the mills to pay for their crop. It has asked the cane commissioners to monitor situation of payment to farmers in the provinces on a daily basis and keep a record of the violating mills.

An office-bearer of the PSMA said that the government had agreed to buy 150,000 tons of sugar from mills in the next few weeks at Rs29.50 a kg, including the sales tax of Rs3.21 – the sales tax rate on sugar was increased on Monday by the government from Rs2.85 a kg.

He said the mills would pay the money after the TCP procures their sugar.

Although the government recently procured 50,000 tons of sugar from TCP, the PSMA is pressing the government to procure more sugar as mills possesses over 2million tons of sugar stocks.

But sources said that the cane commissioners revealed in the meeting that the millers had flouted the official sugarcane procurement rate in all the provinces and had now resorted to blackmailing by attaching the issue of payments with the procurement of sugar by the government.

Last season, the government had fixed official procurement rate for 40kg sugarcane at Rs67 in Sindh, Rs65 in the NWFP and Rs60 in Punjab, but the mills procured sugarcane from farmers around Rs50, and in many areas, middlemen exploited the farmers while buying their crop even cheaper and committing massive irregularities in weighing, observed the cane commissioners.