HYDERABAD: The province’s major grower organisations see Pakistan Sugar Mills Association’s advertisement as a veiled threat by the millers to delay sugar cane’s crushing season as well payment of support price to the cane producers.

The advertisement, published widely in major newspapers last week, cautions that unless export of sugar carryover stocks is allowed sugar industry will not be in a position to commence upcoming crushing season and pay support price to farmers until a similar support is extended to sugar prices.

As per law, this year’s crushing season will become due in October-November. Under new Sugar Factories Control Act the mills have to start crushing not later than Nov 30 every year in Sindh. Last year, some mills had started crushing in the last week of October, well before the season’s commencement date was notified by the government.

Millers did that perhaps to capitalise on favourable market conditions but this year they appear to go for delay.

“Things are different this year as the government is not responding to us to allow export of the stock that is huge,” said a PSMA representative based in lower Sindh while requesting anonymity, though he did agree to the points raised in the advertisement.

In 2023-24, 36 mills – out of 38 in all - had crushed sugar cane in Sindh to produce 20,22,780.929 tonnes of sweetener. A total of 19,279,206.410 tonnes of sugar cane was crushed with 10.370pc recovery percentage.

When compared with of FY2022-23, 16,789,161.093 tonnes of sugar cane was crushed and 1744,808.150 tonnes of sugar was produced with lesser sucrose recovery percentage of 10.1574pc, he said.

He said that till Sept 1, sugar stock of 826,502 tonnes was available in the country which was sufficient to last until Feb 15, 2025. “Roughly, 150 tonnes sugar per month is consumed in Sindh,” he said.

According to PSMA’s ad, at the start of upcoming season 2024-25, Sindh would be holding 500,000 tonnes of unsold stocks. “This 0.5m tonnes is worth Rs70 billion approximately if March 2024’s ex-mill Rs140 per kg of sugar is taken into account,” said the PSMA representative.

The Sindh government had fixed Rs425 per 40kg sugar cane rate for 2023-24, which was 41pc up from the price fixed in 2022-23 i.e., Rs302 per 40kg and according to the PSMA official the rise in price was exponential.

“We realise millers have to deal with growers as both are dependent on each other. So, there has to be some sort of equilibrium in pricing for both the crop and the sweetener,” he contended.

A large number of sugar mills in Sindh are owned by members of the ruling elite and their clout definitely influences the cane price fixation and date for commencement of crushing season carried out by the Sugarcane Control Board.

The PSMA and growers lock horns most of the times over the cane’s pricing and crushing and they finally end up in courts whose decisions mostly favour growers. In last one decade, Sindh government had kept the cane’s indicative price unchanged at Rs182 per 40kg.

Growers see ad as veiled threat

A meeting of Sugarcane Control Board was held a few days back to discuss the price fixation and commencement of crushing season but it remained inconclusive as PSMA representatives did not attend the meeting although leaders of Sindh’s grower bodies were in attendance.

“We had agreed to the price of Rs475 per kg product cost of sugar cane which was presented in the meeting by agriculture department officers although from our viewpoint, cost of production comes to Rs490 per 40kg,” said Sindh Abadgar Board (SAB) president Mahmood Nawaz Shah.

His counterpart of Sindh Chamber of Agriculture (SCA) Miran Mohammad Shah agrees with the SAB president. “But I think what PSMA tends to suggest through its ad is sheer blackmailing tactic,” reacted Miran.

He pointed out that in fact that commencement of crushing season and fixation of price by Sugarcane Control Board had nothing to do with sugar’s price or its export. “And we do expect PML-N federal government to address the issue,” he contended.

“The language of the ad is like a veiled threat for farmers. PSMA employs such tactics when it comes to commencement of sugar cane crushing season,” said SAB chief.

Mahmood conceded that this year’s crop would be relatively higher than last year’s but according to agriculture department’s figures on sugar cane acreage for 2024, against a target of 310,000ha, a 92.9pc sowing target (287,950ha) was achieved in Sindh.

Until recent past the cane crushing season used to begin in October and then came amendment to 1950’s Sugar Factories Control Act in 2009 and the new law i.e., The Sugar Factories Control (Sindh Amendment) Act, 2009, tends to favour millers if they get to delay the season. It allows them to begin crushing not later than Nov 30 though in practice millers often delay the crushing to December or even to January.

According to the PSMA representative, at present ex-mill sugar price stands at Rs122 per kg which was Rs175 in Sept 2023 and Rs140 until March 2024. “We had accepted Rs425 price only to ensure viability of farmers who were battling flood in Sindh,” he said.

Referring to the ad, he said, no industry urged federal and Sindh governments to take decision on 0.5m tonnes carryover stocks to save the industry, farmers and consumers. “We’ve now become tired of approaching the federal government repeatedly,” he said.

The ad implies a warning apparently for farmers and Sindh government. “The industry is no longer in a position to commence upcoming crushing unless huge inventory is cleared,” read the ad while simultaneously hinting at nonpayment of support price to farmers. “It [industry] can’t pay sugar cane support price unless similar support is extended to sugar prices,” noted the PSMA’s appeal.

Miran pointed out that millers had to follow the law for crushing season and should they try to avoid it Sindh government should put its foot down and take action. “The ad being referred to by PSMA Sindh was first published in Punjab which suggest that something is already cooking up to delay the crushing,” he lamented.

Published in Dawn, September 30th, 2024