Sindh Govt notifies sugarcane price of Rs 172/40 kg for Sindh growers

Govt’s subsidy on sugar to benefit businessmen politicians in Sindh, Punjab and KP; Mill owners say subsidised price barely covers their cost;

The Sindh government has followed the other provinces and issued a notification fixing the sugarcane price at Rs 172/40 kg.

The Punjab government had already fixed the sugarcane price at Rs 180/40 kg.

While the government announcements say that the subsidised price is to support small sugarcane growers, the reality is that most of the benefit goes only to industrialist-politicians in Sindh, Punjab as well as Khyber Pakhtunkhwa. Meanwhile the general public is forced to buy sugar at Rs 65 per kg throughout the country.

According to the dealers, almost 90 per cent of the sugar mills in Sindh belong to politicians like Asif Ali Zardari and others while only 10 per cent are owned by tycoons like Shunaid Qureshi (Al-Abbas Group) and Dewan group of Industries. Similarly in Punjab, the dealer said, 70 per cent of the mills are owned by politicians and the rest by the business tycoons.

Federal government has announced subsidy of Rs 13 per kg for sugar, making it one of the most heavily subsidised sectors in the country. But most of this subsidy goes directly to mill owner, who, in most cases are politicians themselves.

“By notifying the 172/40 kg sugarcane rates, the Sindh government has once again rejected the demand of the All Pakistan Sugar Mills Association (APSMA) to fix uniform rates of the sugarcane throughout the country so that sugar can be sold at the same price in all the provinces,” said a representative of APSMA. Now the sugar mills in Sindh will sell their sugar at Rs 8-10 less compared to mills producing sugar in Punjab and KP, he added.

Earlier, the prime minister himself directed all the sugarcane growers not to sell their sugarcanes below Rs 180/40 kg to mills owners, but Sindh government rejected directives of the prime minister as well as the demand of sugarcane growers of Sindh to fix the price at 180/40 kg or above.

According to APSMA Chairman Iskendar Khan, the prices set by Sindh and Punjab governments do not cover even 50 per cent cost of the sugar mills owners. “Last year we paid Rs 180/40 kg to the growers in Punjab and Rs 160/40 kg in Sindh. How can we improve the situation?”

“Total consumption of sugar is 4.8 million tonnes in Pakistan, out of which 70 per cent or 3.3 million tonnes of sugar is being consumed by the industrial sector,” Iskender Khan said. “The prices of sugar will have to be increased throughout the country, otherwise the sugar mills cannot bear the cost of sugar production,” the chairman said.

The prices of sugar have already been increasing throughout the country for the last six month and now its retail price in Sindh is Rs 65/kg, a market dealer said. Sugar price was around at Rs 54-55 in Sindh till March 2015, he said.

According to industry experts, the price of sugar in international markets is around Rs 45-46, but the government has allowed the export of 500,000 tonnes of sugar with a subsidy of Rs 13/kg to help mills owners cover the expenses of sugarcane growers and other expenses.

Over $200 million in foreign exchange would be generated through the export of 500,000 tonnes of sugar, the dealer said, adding that most of the amount would be distributed among the growers. The profit margin is almost 10 per cent, out of which the mills have to pay salaries, bills, taxes, factory maintenances and other expenses, he said.

All sugar mills throughout the country started crushing from January 1, 2016 after a delay of one month as the crushing sugarcane often starts in last week of November every year. As many as 85 sugar mills will produce around 5.5-6.00 million tonnes of sugar by March 2016, out of which only 4.8 million tonnes will be kept to be utilised in the local market while the excess sugar will be exported with a subsidy of Rs 13 per kg.