HYDERABAD: An amount of Rs840 mil­l­ion is outstanding against Omni group’s sugar mills out of Rs1.8 billion of 1,300 sugar cane growers against 22 sugar mills for 2017-18 sugar cane crushing season.

The dues have been reconciled by a com­m­ittee, led by the Sindh cane commissioner, constituted by the Sindh High Court’s (SHC) principal seat in Karachi on Monday.

Representatives of the Pakistan Sugar Mills Association (PSMA) Sindh zone, Sindh Abadgar Board (SAB), Sindh Cham­ber of Agriculture (SCA) and Sindh Abad­gar Ittehad were also part of the committee which met under the chairmanship of the Sindh cane commissioner.

The SHC had tasked the committee to ensure reconciliation of the dues of around 1,300 growers who had submitted applica­tions in the cane commissioner’s office. Growers had been crying against non-pay­ment of their dues involving an amount of Rs1.8bn for 2017-18 season when a contro­versy over sugar cane price led to a serious crisis. Under compulsion farmers had supplied their crop mostly to middlemen for getting cash payments though at an inade­quate rate of per 40kg sugar cane.

Omni Group’s mills owe Rs840m to cane growers

Sugar mills had refused to comply with a price notification of Rs182/40kg issued by the Sindh government. However, in line with consensus arrangements farmers agreed to Rs160/40kg rate to be paid by sugar factories and payment of differential amount (Rs22 per 40kg) was linked with the apex court’s verdict, which was already seized with identical matters of different years.

Official sources and Sindh Abadgar Board (SAB) vice president Mahmood Nawaz Shah confirmed that the outstanding dues of mills owned by the Omni Group had been reconciled and the group was willing to pay it off if the apex court unfreezes their accounts in the wake of an ongoing money laundering probe into fake bank accounts.

“The Sindh High Court in its last order allowed farmers to approach the Supreme Court for payment of their dues as far as the Omni Group’s mills are concerned. So, we [SAB] have decided to move the apex court in this regard in view of such a statement filed by the group in court,” Shah said.

Out of Rs1.8bn liabilities, around Rs100m to Rs120m, which were outstanding against two mills, one of them is Digri sugar mills, could not be reconciled for various reasons. The committee was also said to have disagreed with the contention of two other mills — Bandhi and Sakrand — regarding lesser payments made to growers on ground of sugar cane’s varieties. Such deductions were termed illegal by the committee.

A bumper sugar cane crop was reported in that season. Sugar cane was grown on 333,000 hectare (ha) against sowing target of 320,000ha — up by 13,000ha — with the result that growers were hard pressed to sell their bumper crop to middlemen after factory owners refused to abide by the notification, triggering a price controversy.

In that season growers got frustrated as even the price notification was issued in December 2017 and crushing was delayed by mills. They started selling their crop to middlemen then. In 2018-19 sugar cane sowing had dropped and led to likely decline in production as well. Such figures are to be finalised.

Middlemen being checked

“Growers eventually agreed to a consen­sual price of Rs160/40kg in the Sindh High Court,” said an official. He claimed that middlemen had bought crop from farmers at Rs130/40kg before this arrange­ment was reached in court between millers and farmers. “In many cases of applicants, middle­men are believed to have approached the cane commissioner to seek payment of their outstanding dues against certain mills,” he claimed.

The Sindh cane commissioner’s office was said to have written to various deputy commissioners seeking verification of land-related particulars from them in respect of those applications which were apparently filed by middlemen before the committee.

“We are also trying to see as to how those having smaller landholdings are claiming supplies of a quantum of sugar cane that can be obtained from no less than 400 acres,” said a source. Such middlemen have supp­lied sugar cane to around 13 to 14 mills. Their title documents were being obtained from civil administrations so that their quantum of supplies of crop could be confirmed whether they are indeed bona fide growers.

In rural areas, a middleman exploits farmers by playing with the economy of small- and medium-size farmers. Middlemen offer cash payments to growers to exploit their financial position as growers need cash flows to recover cost of inputs, earn profit and invest in the next crop. So, they sell their crop to them and the same broker or middleman supplies to sugar factory owners.

According to an official, the factory managements understand middlemen are demanding differential amount between Rs130 and Rs160/40kg from them in the wake of consensual agreement between growers and millers. “Mills believe this amount will not go to farmers now, therefore, they are reluctant to pay it and that’s why some mills’ dues are not being reconciled,” he remarked.

Published in Dawn, April 17th, 2019