KARACHI: The sugar industries in Punjab and Sindh are working under the government’s pressure and are being compelled to sell sugar at competitively low rates despite higher rates of sugarcane in both provinces. The government is silent and not taking action against sugarcane farmers who are making cartels in the provinces, the industry sources said.
While talking to The Correspondent, the Chairman of Pakistan Sugar Mills Association Central, Iskender Khan said, “Today’s ex-factory price of sugar is Rs 85 per kg in Punjab and Rs 87 in Sindh while the sugarcane cost is around Rs 310– Rs 320 per 40 kg in Punjab and Sindh respectively.
“How is it possible for the sugar industry to sell Sugar at an ex-factory price of Rs 76 or Rs 78 when they will get sugarcane at a higher cost,” he further said.
He said that we have been trying to convince the government that sugar price will be at Rs 87.65/kg if the industry gets sugarcane at Rs 200 per 40kg.
“As a result, farmers are now making cartels in Punjab and Sindh and selling their sugarcane at much higher rates than set by the government. Furthermore, there is no check and balance from authorities and government, the PSMA’s official claimed.
Sugar Mills owners claimed that the sugar is being exported to Afghanistan through legal and illegal channels,” office-bearer informed adding that the sugar price in Afghanistan is at Rs 160/kg and it’s government’s responsibility to control smuggling of sugar to neighbouring countries.
The industry people are monitoring this situation of sugarcane and are of the view that stability in the prices will be achieved after the closing of crushing season in March this year.
He said “Punjab PSMA had categorically informed the government that it should start crushing a bit late as the sugar content would be less in the start of November. Also, the Sugar Factories Control Act 1950 clarified that the crushing should start not later than 30th November. But the federal government forced the sugar millers to start crushing by 10th November 2020 in South Punjab and by 15th November in Central Punjab.
The analysts are of the view that under the Cane Ordinance, the Cane Commissioner has a lot of authority. In his order which was immediately issued said that dates and if the mills did not follow his orders they could face three years imprisonment and Rs 5 million per day penalty for not following the instructions of Cane Commissioner Punjab, the spokesman said.
Although this Cane Ordinance is only limited to the sugar mills in Punjab whereas in Sindh and KPK such laws to threaten the mills do not exist. As the mills implemented the government’s decision and started the crushing season whereas now the government has started to realize the issue of less production of sugar due to low recovery, due to early start, the spokesman claimed.
At present, the prices of cane have started to shoot up. Right now the prices range from Rs 270 – 290 per maund at the mill gate which in turn has jacked up the cost of production of sugar, he added.
Currently, the prices of sugar being sold at ex-mills range between Rs 83 – 85 per kg. The spokesman denied, “the prices were touching Rs 100/kg and said they are just propagating false sale prices.”
Now as the cane prices have gone too high the farmers have also started to hold their cane crop hoping that the price of cane would further rise whereas in Sindh cane price has already touched Rs.350 per maund, he claimed.
The spokesman said that if you calculate sugar’s cost of production, 85% is the cost of sugarcane in one kg while the remaining 15% includes salaries, chemicals, utility charges, financial charges, packing material, oil and lubricants, administrative cost, selling and distribution cost. He said that at the moment, cost of sugar ranges between Rs 85 – 90 per kg, different mills would have a different cost of products keeping in view the sugar recovery and crushing capacity in the range of each mills.