HYDERABAD: Sugar cane production in Sindh recorded a significant drop in 2018-19 season from what it was in 2017-18 caused mainly by seemingly unending controversy over the issue of fixation of cane price, long delays in release of payments to growers and clearance of liabilities by factory owners.

The mills crushed 15.930 million tonnes cane and produced 17.193m sugar in 2018-19 season, more than four million tonnes less than the corresponding figures of 2017-18 season, when the cane’s crushing was recorded at 21.625m tonnes and sugar’s production stood at 22.814m tonnes.

However, the mills did not suffer considerably from this drop because of the sucrose recovery from the cane remained almost intact at 10.411 per cent which meant that millers got more sugar from the cane despite having lower production in outgoing season.

“Growers feel increasingly disappointed because of the controversy over cane price that takes place and goes on unendingly every year. With the matured crop ready for harvest and millers not appearing in hurry to buy it from growers, farmers who always remain at the receiving end agree to sell their crop for lower prices offered by middlemen,” said Mehmood Nawaz Shah, Sindh Abadgar Board’s vice president.

He believed that this year too the cane’s acreage might show decline but per acre productivity would be better due to impact of monsoon rains on the crop.

Sindh government has been fixing the cane price at Rs182 per 40 kilogramme for at least last five years while growers reject it outright on the ground that it is not enough even to meet their cost of production. The mill owners assert that the rate of Rs172 per 40kg or Rs182 per 40kg is not viable when they add cost of certain taxes to their ex-factory price.

“The provincial government doesn’t consider price of sugar while fixing the cane’s rate for any season. In last season, a rate of over Rs200 per 40kg was paid to farmers,” said Pakistan Sugar Mills Association (PSMA) chairman Aslam Farooq.

Interestingly, he did not explain if the millers could comfortably pay Rs200 per 40kg last year then why had they been questioning the official price of Rs182 per 40kg for one or the other reason for the last few years.

The PSMA leader contended that if growers had not been getting competitive rate, they would not have been growing the corp. If sugar price had shot up to Rs75 to Rs80 per 1kg in retail market, the government should investigate it because the ex-factory rate of the sweetener remained pegged at Rs66 per 1kg, he said.

The Sindh Abadgar Board said that while the sweetener’s price increased by Rs20 a kilo, the crop’s price did not rise. “The cane crop is becoming a serious issue although this crop is protected under a law. Other crops also didn’t offer better returns to us,” he remarked.

Every year, the price controversy mars cane crushing season as Sindh government decides to fix the cane price mostly in October and the seesaw between millers and growers starts all over again, with millers rejecting the notification and growers demanding increase in price. Finally, by the time the crushing season starts growers are so fed up they supply the cane to factory owners at lower rates.

“It is a story of every season that we face deductions from crop on the ground of approved and non-approved variety of sugar cane. Massive deductions on each cane laden trolley put growers in deep trouble and they had to supply their crop for lower prices in order to reduce their losses,” said Sindh Chamber of Agriculture’s vice president Nabi Bux Sathio.

He anticipates less cane production in 2019-20 season as well and argued that neither the government nor the millers were ready to realise that a farmer’s cost of production had increased manifold in recent past. “Still, the cane’s rate i.e. Rs182 per 40kg remains unchanged for last few years,” he said.

More sucrose & quality premium

It is recovery of sucrose which determines payment of quality premium over and above actual rate of cane. Sindh’s benchmark for sucrose is 8.7pc and when recovery crosses the benchmark, a miller has to make payment at the rate of 50 paisa per 40kg of cane for each 0.1pc of excess sucrose benchmark recovery.

Sindh’s millers lost their quality premium case in March this year in Supreme Court. They had challenged Sindh High Court’s judgment in favour of Sindh Abadgar Board on quality premium issue back in 1997. Now the millers have no option but to pay quality premium to growers but it was not made in last season.

The sugar cane acreage in last crushing season dropped by 13.2pc as against a target of 322,000 hectares, the cane was cultivated on 279,472ha whereas in 2017-18 333,262ha were brought under cane cultivation against a target of 320,000ha, showing an increase of 4pc over and above the sowing target.

Sindh Abadgar Ittehad (SAI) president Nawab Zubair Talpur subscribed to Sathio’s view on less cane production this season (2019-20) again. “A representative of Mehran Sugar Mills of Tando Allahyar told me that they will try to get the cane from the area connected with Faran Sugar Mills of Tando Mohammad Khan on account of likely drop in the cane crop,” he said.

On quality premium’s liabilities, he said that these were calculated at Rs34bn if 2018-19’s sugar cane production was taken as average production for the last 20 years when quality premium was last paid.

He said the government’s indifference had always worried growers as it left them high and dry when their legitimate interests were undermined by vested interests in every season.

Mr Shah pointed out that the government had not taken any measures in this regard to make sure that quality premium was paid to growers. “What does it show?” he asked. Besides, he said, growers were still demanding payment of their outstanding dues from millers.

Published in Dawn, September 30th, 2019