Sugar pricing

Sugarcane is an important cash crop of Pakistan. It is sown on a large area of the country. Linked with it is a viable industry. Sugar industry is the second largest agro-based industry in the country, producing refined sugar from the sugarcane. Also, some portion of the crop is used for the production of ‘Gur’ (Brown Sugar), especially in Khyber Pakhtunkhwa. Sugarcane is a long duration crop as compared to other cash crops grown in the country. It requires great skill and huge investment in the form of inputs on part of the farmers to grow this labour-intensive and cost-oriented crop. The farmers are faced with a host of problems in the form of increase in cost of inputs, high labour rates, water charges, etc. However, at the end of the day, the farmers are at the mercy of the sugar mills and are unable to get even cost of production of the crop and to have both ends meet.

A meeting of the newly re-constituted KP Sugarcane Control Board held on November 22, 2016 urged the federal government to allow the subsidy on export of sugar, exempt sugar from sales tax and direct millers to divert the amount received from these incentives to the growers who are demanding increase in the price of sugarcane. The board also took up a number of issues facing the growers and other shareholders. Increase in the prices of sugarcane remained the focus of discussion in the meeting. A couple of years back, the Economic Coordination Committee (ECC) had allowed sugar mills in Punjab and Sindh a subsidy of Rs10 per kg on the export of sugar, but the mill owners of KP were deprived of the incentives. Also, keeping in view the surplus sugar production, the ECC had allowed the subsidies in a bid to enable sugar exporters to compete with the international market prices. KP and exporters of other provinces were demanding 50 percent subsidy from the federal government. In view of the above, the provincial government of KP is requested to take up the issues of subsidy on export of sugar and its exemption from sales tax. This will enable the millers to divert the amount of subsidy so received to the farmers in the form of high prices and hence better returns to them.

Khan Faraz

Peshawar