ISLAMABAD, Nov 6: The government and the Pakistan Sugar Mills Association (PSMA) have differed over the estimate of sugarcane output this season and an agreement for start of crushing season is falling apart owing to higher than expected carry over stocks, it is learnt.

Informed sources told Dawn that against the official estimates of 62.3 million tons of sugarcane output, the PSMA estimated the crop output at less than 58 million tons.

The country had total remaining stocks of more than 992,000 tons of sugar on Oct 29, which meant that the crop year would conclude with a carry over stock of about 800,000 tons. As a result, the government-PSMA agreement for the start of crushing season from Nov 1 in Sindh and Nov 10 in Punjab has failed to materialise. As of Tuesday, only two sugar mills — one each in Sindh and Punjab — have started crushing.

The PSMA has informed the federal government that a crisis of a different nature is looming this year. It informed a secretaries’ committee led by adviser to the prime minister on finance Dr Salman Shah that crushing was being delayed due to non-availability of labour as a result of unrest in Swat region and delayed maturity of the sugarcane crop.

The industry also informed the committee that millers would face difficulties in making payments for sugarcane if sufficient stocks were not lifted immediately. The secretaries committee is scheduled to meet on Nov 8 (Thursday) to take stock of the situation.

The PSMA sources said the government had agreed to purchase 400,000-500,000 tons of sugar from the industry and lift more than 200,000 tons immediately at a fixed rate of Rs29 per kg. However, the Trading Corporation of Pakistan (TCP) was floating tenders for the purchase of sugar at competitive rates that could crash the sugar prices.

The PSMA has also demanded the government to control the sale of Indian sugar in the market and ban its movement under the Afghan Transit Trade, which it said was resulting in large-scale leakage of Indian sugar in the market at a price even lower than being sold at Utility Stores.

The PSMA criticised the administrative action taken against sugar mills in Sindh on account of delayed sugarcane crushing and informed the government that this would lead to further delays. Sources said the Sindh government had started legal action against more than 25 sugar mills for the delay in crushing season beyond the agreed schedule of Nov 1, 2007, under the Sugarcane Factories Control Act, 1950.

The industry claims that it was facing a glut-like situation owing to government’s inability to honour its commitment of lifting 200,000 tons of sugar by Nov 1 and purchase of another 200,000-300,000 tons from the mills.

India, sources said, had more than 3.5 million tons of surplus sugar this year and had facilitated its industry to dump large quantities in Pakistan in the garb of Afghan Transit Trade, although the product did not conform to the Pakistani standards.

Pakistan has become a host of sugar crisis for the last few years, in case of shortage and surplus. Last year, consumers paid Rs46 per kg owing to the shortage at home and alleged hoarding that led to investigations but without any outcome. This year again the government resorted to sugar import to stabilise prices that led to surplus stocks of about 700,000-800,000 tons.