Billions profit in Sugar Mills

ISLAMABAD: The powerful sugar millers have got billions of rupees in extra income with a regular hike in sugar prices, though prices of the input – sugarcane – have remained almost static for the last three years.

The disclosure was made in a meeting of the Economic Coordination Committee (ECC) of the cabinet held on December 28, 2016.

Sugar millers fetch billions as prices rise suddenly

Apart from the price increase, the sugar millers are receiving a huge monetary incentive from the national kitty. The current government has provided over Rs10 billion in bailout packages on the export of sugar.

The Inter-Ministerial Committee, constituted by Prime Minister Nawaz Sharif, assessed price trends in the international and domestic markets and noted that sugar rates had dropped from $597 per ton in September 2016 to $490 on December 20, 2016 in the world market. The committee found that the sugarcane price had remained stable at Rs180 per 40 kg in Punjab since 2014-15 and was slightly increased by Rs10 in Sindh in the current crop year.

However, the retail price of sugar in the domestic market during the week ended December 15, 2016, according to the Sensitive Price Indicator, stood at Rs62.61 per kg compared with Rs54.12 in December 2014 and Rs57.16 in December 2015.

During discussions in the ECC huddle, Minister of State for Information Technology Anusha Rahman referred to minutes of the Sugar Advisory Board meeting held on December 19, 2016.

Sugar stocks: Millers cite unverified data to win approval for exports

The board was informed that sugar prices had been regularly increased over the years despite virtually no change in sugarcane rates for the last three years. The chairman of Pakistan Sugar Mills Association, a lobbying group of the millers, claimed that their production cost had increased and it now stood at Rs64-65 per kg.

He boasted that Rs230 billion worth of outstanding payments had been made to the sugarcane growers and foreign currency valuing $132 million was earned through sugar exports.

The Textile Industry Division secretary revealed that less area had been planted with sugarcane crop, which could lead to a decline in production in the next crushing season.

The National Food Security and Research Division secretary countered that the cultivated area had not gone down, in fact, sugarcane production was expected to fall because of unfavourable weather conditions.

It was noted that in case sugar exports were allowed, domestic prices may further increase.

However, according to some meeting participants, 0.871 million tons of sugar was in surplus that could be exported after consumption of 5.525 million tons for 13 months in the country at the rate of 0.425 million tons per month.

The Sugar Advisory Board had agreed on the production estimate of 5.4 million tons for crop year 2016-17 with carryover stocks of 0.996 million tons.

It recommended export of 0.3 million tons by March 13, 2017 while keeping 0.53 million tons in strategic reserves.

However, the ECC allowed sale of 225,000 tons overseas, setting aside fears of lower production and price increase in the domestic market.

Source: The Express Tribune

Moonis Elahi Urges Punjab Government to Favor Farmers and Agriculture problems in Pakistan

As sugar cane crushing season has started, farmers from all over the province make their way to the factories in hope to get good money for their sugarcane crop harvested. But this year the farmers do not seem interested in giving their crop to the mills. Moonis Elahi says farmers have lost their trust in the current Punjab Government policy. While only Tandiwala sugar mills bought sugar cane the rest are to start buying from 25th November. Even though the date has been announced but the turnout expected was very low which rings alarm bells. If farmers do not sell their crop to the mills there could be a shortage of sugar in the country.

Moonis Elahi says the major issue is the current price announced by the government. As farmers would be paid Rs. 180 per 40 kg, only Rs. 10 per mound have been increased from the price announced last year. disheartened by the rates offered to them by the mills, farmers have started setting up Jaggery plants on their lands as its rate is Rs. 3000 to Rs. 3500 per 40 kg in the market. It is the task of the CM to look into such matter and ensure that there are no monopolies played during the season. The shortfall could result in inflation and black market sales. Another huge setback for the farmers is that they do not get paid for their crops sold to the mills in time. 

A Tandiwala official claimed they would pay farmers net cash and would ensure all dues are cleared within a week. Moonis Elahi condemns the practice of sugar mills to not pay for the harvest when they are buying and rather make false promises with the poor farmers. When the poor doesn't get paid in time he gets burdened by debt which crushes his life even more. They are forced to take loans on heavy interests which makes their life a living hell. Farmers in Alipur and Jatoi are really disappointed with Haseeb Waqas mills as they have failed to clear more than Rs. 180 million they owe to the farmers for last year's crop yield.

Javaid Asif, a local farmer sated "they [Haseeb Waqas mills] have not cleared me of my previous cheque and yet they promise me of paying for the fresh crops. I have a family to feed, a land to take care of and need to pay off my debts which I had borrowed in hope of getting paid this year. How do you think I can survive when the mills aren't paying us?" Khadim Hussain, a local farmer says he has set up a Jaggery unit at home and is selling it on net payment. Last year he had sold his harvest to Fatima Sugar Mills who cleared him of his dues after 3 months. 

This year he does not intend to wait for the mills and has rather set up his own unit which brings him more profit. The young but mature politician Moonis Elahi has urged the incumbent government to look deeply into the matter and ensure farmers get paid before the matter worsens and it becomes too difficult to solve. If mills do not get sugar canes there will be a huge sugar shortfall in the country.