LAHORE: The ex-mill sugar price has increased by almost Rs 5 per kilogram during the last five days at a time when the crushing season is under way and supplies are higher than demand.
According to the sugar mills industry reported data sent to the Punjab Cane Commissioner Department, almost 1.4 million tons of sugar was produced since the start of the crushing season till third week of December while almost 400,000 tons were sold in the market.
An official of the Punjab Cane Commissioner Department said that form November 10 to the third week of December, the average price of sugarcane was Rs 205-210/40 kg in Punjab. It registered an upwards trend and from December 21-31 ranged between Rs 215-230/40 kg. A further increase in the sugarcane price was recorded for the last one week and it ranged up to Rs 250/40 kg.
The rise in sugarcane price was due to purchase of sugarcane by the purchase agents of Sindh sugar mills where it is being sold at Rs 300-330/40 kg due to crop shortage. However, the official said that deputy commissioners were instructed to take action on it and restrict it.
Meanwhile, a Food Department official said the increase in sugar price is unjustified as the average sugarcane purchase price till third week of December was Rs 206/40 kg. The ex-mill sugar price should not be higher than Rs 72 per kg. So the ex-mill price of sugar against the quantity of sugar produced till third week of December should be Rs 72 per kg. Further, the ex-mill sugar price touched the level of Rs 71 to 74 per kilogram for a brief period of around three days in the start of December. Later, it started increasing and for the last five days it witnessed an increase of almost Rs 5 per kg. Currently, the ex-mill price of sugar ranges between Rs 8250-8300 per 40 kg bag for South Punjab mills and Rs 8450-8500 for Central Punjab mills. Almost Rs 3 per kilogram added to the ex-mill price for the consumer price. Thus the rates of sugar should not be higher than Rs 88 per kilogram.
However, in the market, the price of sugar has increased following the increase in ex-mill sugar price. In markets, sugar is selling up to Rs 95 to 100 per kilogram. Since the ex-mill sugar price is fluctuating during the crushing season and even after the crushing, the consumer price also remained swinging. Due to the absence of any unified cost calculation mechanism, the prices of sugar remained fluctuating.
Meanwhile, a spokesman of the Pakistan Sugar Mills Association (PSMA) said the PSMA had informed the government and the Food Ministry that by starting early sugarcane crushing season, sugar contents would be minimum and apprised them that the cane was not ripe to start the crushing season. The government had forcibly started the ongoing crushing season by November 10, 2020 in South Punjab and by November 15, 2020 in Central Punjab.
Further, the Sugar Factories Control Act 1950 clarified that the crushing has to commence not later than November 30. But because of the Cane Ordinance which has given huge powers to the cane commissioner Punjab, who immediately issued the orders of the said dates, saying that if the mills do not follow his orders, they could face three years imprisonment and Rs 50 lakh per day penalty for not following the instructions.
The spokesman stated that at present the prices of cane have started to shoot up going more than Rs 270–290/40kg at the mill gate. Currently, the prices of sugar being sold ex-mills at the moment ranged between Rs 83–85 per kg. The spokesman denied the media report that the prices were touching Rs 100/kg.
Now as the cane prices have gone too high, the farmers have started to hold their cane crop, hoping that the price of cane would further rise whereas in Sindh, the cane price has already touched Rs 350 per maund.
The spokesman said if you calculate the cost of production of sugar out of which 85 per cent is the cost of sugarcane in one kg and 15% includes the salaries chemicals, utility charges, financial charges, packing material, oil and lubricants, administrative cost, selling and distribution cost.
He said at the moment the cost of sugar ranges between Rs 85-90 per kg, different mills would have different cost of production, keeping in view the sugar recovery and crushing capacity in the range of each mills.
Meanwhile, Pakistan Kissan Movement Secretary General Chaudhry Hanif Gujjar stated that the ex-mill rate of sugarcane has risen to Rs 270-280/40kg, but the farmers in Sindh are getting more than Rs 300/40kg. He stated the middlemen are purchasing cane in South Punjab at more than Rs 315/40kg including freight and selling to Sindh sugar mills. He said if the Sindh farmers can get Rs 300/40kg of sugarcane price, why the farmers in Punjab are not getting that amount.