KARACHI, Jan 19: The Sindh government has convened a meeting of all stakeholders of sugar industry, including growers on Monday, to sort out the ongoing crisis.

Sugar industry is currently trapped in a deep financial crisis due to lowest price of the white refined sugar in the domestic market with highest-ever cost of production, official sources disclosed on Saturday.

A delegation of sugar industry and growers met the Sindh chief minister last week where it transpired that the provincial government would forward recommendations to the federal government seeking ban on fresh sale of sugar by the state-owned Trading Corporation of Pakistan (TCP) because this was further depressing prices of the commodity.

It was also suggested to the federal government to approve industry’s demand of lifting surplus sugar stocks to overcome its financial crisis so that payments to growers could be ensured.

The federal government was also asked to develop a mechanism so that sugar prices could improve and it could lessen losses of sugar industry, sources said.

Sugar industry is expected to produce four million tons of sugar this season on harvesting a bumper sugarcane crop of around 60 million tons.

The depressed sugar prices in wholesale market at Rs22 per kg disturbed the industry’s viability. Presently the industry has to incur a cost of Rs30 per kg, thereby causing a loss of Rs8 per kg.

Sources said due to colossal losses, the sugar industry in Sindh was on the verge of collapse, and if no immediate corrective measures were taken, crushing could come to a halt any moment.

They further said serious financial crisis of the sugar industry triggered from 2005-06 crushing season on huge increase of Rs17 per 40 kg in sugarcane prices to Rs60 had been the main cause of lingering crisis in the industry.

Such a significant increase of around 40 per cent in cane price disturbed semblance of proportion in the form of a loose economic equilibrium existing between sugar production cost and its price.

The situation was aggravated by additional increase of Rs7 per 40 kg in cane price in 2006-07 crushing season. Therefore, in two successive seasons, price increase administered was unprecedented at Rs24 per 40 kg cane which stands about 56 per cent of base price when cane was at Rs43 per 40 kg.

Besides, a sizable increase in cane price, the government resorted to liberal import of sugar without taking into confidence the sugar industry and this had created huge carry-forward stocks which stood at around one million tons at the start of 2007-08 crushing season.