HYDERABAD: The Sindh government on Tuesday asked sugar millers to start cane crushing by Nov 30 and vowed to issue a notification fixing current sugar cane crop’s indicative rate for the 2018-19 season even without a consensus on it.

At a meeting chaired by Agriculture Minister Ismail Rahu in Karachi, represen­ta­tives of millers and growers did not agree on a consensus rate.

Speaking to this reporter by phone from Karachi, Mr Rahu said that the two sides took different positions. He said he told millers not to expect any subsidy from the provincial government.

Crucial meeting with agriculture minister remains inconclusive

“No subsidy is offered to millers,” he said while referring to last year’s subsidy of Rs9.30 per kg of sugar pitched in by the Sindh government.

Sindh Abadgar Board (SAB) submitted its working paper for cost of cane production putting it at Rs198/40kg. The agriculture research department puts it at Rs180/40kg.

Pakistan Sugar Mills Association (PSMA) Sindh zone representatives said they could not afford even Rs180/40kg or so given the cost of per kg sugar production.

They also complained that the federal government had not yet paid to them the export rebate at the rate of Rs10.70 per kg as was committed by it in 2017-18 season. They said that Sindh government should help them get the payment calculated at Rs16 billion.

Millers also pointed out that around 1.5 million tonnes of sugar was available with them but the Economic Coordination Committee (ECC) had not yet taken a decision regarding its export.

Agriculture secretary Agha Zaheer said that millers at the meeting offered Rs130-Rs140/40kg rate this year. The minister argued that Punjab government had fixed the rate at Rs180/40kg.

Millers were told that Sindh government had cleared subsidy of Rs9.30 per kg announced for the previous season. “Only a fraction of it might be pending,” Mr Rahu said.

Federal subsidy linked with growers’ dues

The ‘federal subsidy’ is shared by federal and provincial governments on a 50-50 basis. Since federal government has not paid its share of Rs5.35 per kg out of the Rs10.70 per kg federal subsidy, Sindh government has not paid it either.

Federal government has linked payment of subsidy with clearance of farmers’ dues and commencement of crushing by Nov 30. The payment has remained withheld amidst reports that millers did not abide by the conditions.

“We told millers they should take up their case for subsidy with federal government as this has nothing to do with fixing of sugar cane rate. I told millers that when they themselves had capped payment of sales tax on sugar at Rs6 per kg during the tenure of prime minister Shaukat Aziz, why are they clamouring now,” contended SAB vice president Mahmood Nawaz Shah.

Sindh government had fixed the cane procurement rate at Rs182/40kg for the 2017-18 season but it led to litigation in Sindh High Court (SHC) after millers refused to accept it. The millers did win subsidies from federal and Sindh governments and in the meantime both sides agreed to a consensus rate of Rs160/40kg in court, which linked payment of Rs22 differential with a verdict by the apex court in millers’ identical petitions.

According to Sindh Chamber of Agriculture (SCA) vice president Nabi Bux Sathio, farmers support millers’ demand for payment of subsidy although ethically millers are not entitled to it. “Since millers didn’t start crushing by Nov 30 in 2017-18 season and delayed it till January, they morally should not be asking for this subsidy. They even suspended crushing last year,” he said.

Sathio argues that while millers insist on payment of Rs16bn under the head of export rebate, why do they forget that they have to clear liabilities of growers towards differential amount which continue to accumulate since 2014-15 season.

“In each season, millers questioned notified price but neither the SC nor the SHC ever set aside the notification, which remains intact. We agreed to consensual agreement in Sindh High Court for payment last year when court linked differential payment with apex court’s decision in identical cases,” he said.

If millers, he said, demand export rebate they must remember they had to pay billions of rupees towards differential amount of sugar cane rate of last four seasons, starting from 2014-15 till the last crushing season. Differential amount of Rs10 is to be paid for three seasons and Rs22/40kg for 2017-18.

“If we assume that around 400 maunds of sugar cane was crushed in each season, then Rs52/40kg is to be paid to us accordingly in each year,” he said.

SCA president Kabool Kathian and general secretary Zahid Bhurgari pressed the point that farmers would not accept any rate lower than Rs200/40kg for sugar cane crop this year.

Published in Dawn, November 21st, 2018