LAHORE, March 24: Pakistan Sugar Mills Association (Punjab chapter) claimed on Monday that the market has crashed because of wrong policies of the federal government.“A serious crisis has developed in sugar and sugarcane because of government’s backing off its commitment and assurances,” a PSMA spokesman said on Monday.

The present sugar prices have been the lowest during the last five years. Last year, the government increased the sugarcane price from Rs45 to Rs60 per 40 kg against PSMA’s suggestion of Rs50 per 40 kg.

It was because of government’s arbitrary decision of increasing the sugarcane price by 33.3 per cent and the fact that the crushing season could not be started because of lower sugar prices, the federal government gave its commitment that ex-mill sugar price would be maintained at Rs29.50 per kg through the Trading Corporation of Pakistan (TCP) mechanism.

The spokesman said that the sugar mills started crushing season on the assurances of the federal government through a secretary-level committee, which after getting firm clearance from the then prime minister, Shaukat Aziz, conveyed to the PSMA that Rs29.50 per kg ex-mill sugar price would be maintained.

But as soon as the industry started crushing season, the federal government backed off its commitment and started to offload TCP stocks of sugar at Rs26 per kg and later at Rs24 per kg.

The latest price at which the TCP off-loaded its stocks was Rs18 per kg, while this sugar had been imported in surplus quantity of 1,000,000 tons against the shortage of 500,000 tons.

Tax-payers’ around Rs15 billion was spent on giving subsidy on sugar imports,” the spokesman said.

The spokesman said neither the sugar industry was in a position to pay sugarcane growers their dues, nor it would be able to pay the sugarcane support price announced in Sindh, the NWFP and Punjab.