Another sugar crisis raising head

ISLAMABAD, The country is heading towards another sugar crisis as most of the mills in Punjab are likely to delay the crushing, not before Eid-ul-Azha, because of working capital problem. But the delay would increase the sucrose content of the crop, sugar industry sources told.

However, mills in Sindh will start cane crushing from November 15 as most of them have started igniting boilers. "I am foreseeing another sugar crisis in December because mills in Punjab will not light up their boilers before December. The main logic behind this plan is to increase the sucrose content," said one mill owner. However, another mill owner stated that mills in NWFP would start crushing from November 15.

"I have been apprised that some sugar mills will not start crushing because they do not have working capital," said another sugar mill owner. People will only get sugar produced in Sindh, which cannot meet the requirements of the entire country, he observed. Presently, 30 percent sugar consumed by domestic consumers is under strict control of local administration, but insiders in one of the Federal Ministries said that mills are not releasing stocks as per commitment.

After marathon negotiating sessions in the Ministries of Industries and Finance, the government acceded most of the demands of sugar mill owners which ensured that they would sell sugar at Rs 40 per kg to 30 percent of sugar consumers in the light of Supreme Court instructions.

"PSMA's demands like linking of sugarcane price with sucrose content, import of 0.5 million tons of raw sugar next year, provision of working capital, extension in payment deadline for working capital taken last year, have already been accepted by the official negotiators.

In return, millers are providing sugar to enable the government to sell it at Rs 40 per kg in the market," said another sugar mill owner. The government has also agreed to use Cane Procurement Receipts (CPRs) as cheques, which was the long-standing demand of farmers. The government is using the Utility Stores network, mobile utility stores, and designated shops to supply sugar to domestic consumers.

There are, however, allegations that sugar procured from sugar mills at Rs 36 per kg under police control is being sold in the market at Rs 50 per kg in Punjab and Rs 60 in NWFP and Sindh. It is yet to be investigated as to who is making this windfall profit though fingers are being pointed towards some provincial decision makers and district administration.

Sugar Policy 2009 will be implemented from January 2010, after its announcement in December. According to the Ministry of Industries and Production, all decisions were taken while considering the agenda items in their respective format and final decisions were taken after consensus between all stakeholders including representatives of the federal and the provincial governments and the members of the PSMA.

source: pakwatan