ISLAMABAD: A stalemate continues between sugar mills, farmers and government writers on the value of sugarcane as customers continue to suffer from high prices of different commodities.
On the other hand, because of the new legislation that allowed transfers by bank accounts only, the intermediaries were making substantial income.
On Saturday, Minister of Factories and Development Hammad Azhar acknowledged that sugar prices were once again on the increase and said the government was jointly considering abolishing import duties on raw sugar to ensure sufficient stocks at fair prices in the region.
The minister, speaking on a private TV station, said that his ministry would forward a review in this regard to the Economic Coordination Committee (ECC).
He acknowledged the enhanced role of the intermediaries in the procurement of cane and said it was directed to eradicate this activity by the provincial governments.
He said that, in order to avoid hoarding, the Federal Board of Rev-e-nue will instal cameras in sugar mills to stay aware of the production details.
In the meantime, Iskander Khan, chairman of the Pakistan Sugar Mills Association (PSMA), wrote a letter to Prime Minister Imran Khan in which he highlighted the problems with sugar prices and called for measures to stop the smuggling of sugar and jaggery (gur) to Afghanistan and Central Asia to balance local markets.
The PSMA said the federal government had to enact the 1948 Gur Control Act, which requires only 25 percent of the production of sugarcane for jaggery.
“Currently, however, about 100% of the sugar cane in Peshawar Valley is diverted to Gur making, with most of it smuggled out of the country,” the letter told the prime minister.
At a recent meeting of the Sugar Advisory Board, which witnessed barrages of allegations from all directions, these concerns were addressed, while the sugar millers voiced their dissatisfaction over the inability of the government to ensure a smooth supply of sugar cane at a support price of Rs200 per 40 kg.
They cautioned that if the government refused to uphold its promise, in the coming weeks the nation might see a rise in the price of the product.
Following a fall in the past month, sugar prices in various markets have risen by Rs5-6 per kg over the past week, though retailers have expressed concern about the instability of the market.
At present, with the wholesale rate of Rs90, the retail price has reached Rs95 per kg, but the markets are buzzing with rumours that prices could increase to Rs100 per kg,” said Fareed Qureshi, Chairman of Karachi Retail Grocers Group.
On the other side, a compromise was not found by the major players and the sugar advisory conference, chaired by Hammad Azhar, the Minister for Industries, remained inconclusive.
Sources said the meeting was told that the existing prices were Rs300 in Sindh, Rs270-Rs290 in Punjab and Rs290 in Khyber Pakhtunkhwa instead of the state set sugarcane support price of Rs200 per mann (40kg).
Based on the cane price at Rs200 per mann, the Ministry of Industries determined that the retail price of sugar should be between Rs75 and Rs80.
In the meantime, the Sindh cane commissioner admitted that the prices in the province were over Rs300 due to this year’s cane shortage, saying “this will also benefit the farmers.”
Around the same time, the participants decided that, owing to the legislation that made it obligatory for sellers to have a bank account that most farmers did not, a new class of intermediaries was present near the sugar mills.
Hakim Ali Baloch, a farmer based in Rahimyar Khan, said that the bank account was a problem and said that new regulations required “cane purchase receipts (CPR) to be issued by the mills to growers and the amount to be paid through banks,” adding that “many people did not have an account, one reason being that it was a problem as the bank is about 20 km away.”
Eventually, the local intermediaries end up buying the sugar cane cash from farmers and selling it to the factories, maintaining their margins and thereby raising the cost of raw material for the sugar mills.
In the meantime, sources said that the smooth supply meeting for mills was not assured by the respective cane commissioners.
On the other hand, an industry ministry official said raw sugar prices in the international market were high and the ex-mill rate will be about Rs90 per kg after refining.
The representatives of the PSMA shared their fears that sugarcane was not being shipped at the official support price to the mills.
The association requested that the government should abolish 17pc sales tax on refined sugar in order to bring down sugar rates, as it was done in the case of flour and pulses.
In response to the issue, the chairman of the PSMA said that, on the one hand, the government wanted to reduce the price of sugar while, on the other, it was shying away from its obligation to reduce the position of intermediary and guarantee the supply of sugar cane to mills at a price set by the government.
Federal Minister Hammad Azhar, on the other hand, told the meeting that if the provincial authorities had not reached an agreement with the sugar mills, there would be no choice but either to import raw sugar for processing in the mills or to import refined sugar and to market it through utility stores to consumers at subsidised rates.