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January 7, 2015

Mills in Sindh stop sugar production


January 7, 2015

KARACHI: Around 30 mills in Sindh on Tuesday abruptly stopped sugar production to press their demand for a cut in current sugarcane support price, or get a subsidy on their production costs, industry officials said.
“Sugar mills in Sindh have suspended cane crushing by midday (Tuesday) for an indefinite period,” said a miller owner, requesting anonymity. “The production will remain suspended unless the government cut cane prices or grants at least Rs10/kilogram subsidy on sugar production this season.”
The mill owners have demanded to revise the cane support prices to Rs155/40 kilogram in the province from Rs182/40 kilogram. This price millers said is unplayable as sugar prices in the domestic market have fallen leading to mounting losses.
“We are unable to keep continue production…the cost of production is much higher than our sales price,” the miller said.
Explaining the sales realization quotient, he said the cost of production is around Rs 60/kg as against the realisation of Rs49/, which is worrying mill owners.
The sugar millers in Sindh have twice approached the Sindh High Court at the start of current sugar production season but failed to get any relief on pricing issue. Pakistan Sugar Mills Association (Sindh Zone) has decided to file a case in the Supreme Court of Pakistan after the Sindh High Court dismissed it plea on December 30, 2014.
The country’s sugar consumption is pegged at around 4.6-4.7 million tons, and it started the 2014/15 year with around 800,000 tons of stock. The season the country is expected to produce 5.7 million tons of sugar. The association had proposed the government to allow export of 1.5 million tones this season, which includes export of 500,000 tons with immediate effect and export of another one million tons at the end of the crushing season. The government has so far allowed export of 650,000 tones of surplus sugar and has incentivized the export by giving a subsidy of Rs10/kg. Sugar

millers want subsidy on total production this season instead of allowed export quantity.
The central bank however, conditioned export and made it mandatory to produce a certificate from the sugarcane commissioner, stating that the mill-owners/exporters have cleared dues of growers.
Syed Mehmood Nawaz Shah, vice president of Sindh Abadgar Board said the farmers have been supplying cane at a price of Rs155/40 kg for last 10 days in Sindh.
“Suspension of sugar production is unjustified as the farmers are holding the cane prices down,” Shah said. “We will hold protest in the province against closure of the mills from Wednesday (today).”
Shah advised the mill-owners to resume sugar production and at the same time engage the government and growers on cane price and subsidy issues. “They should wait as the government usually announces incentives for sugar mills sometime in March-April,” he said.
Shah said a late start of the crushing season has already delayed cane cultivation in the province. “Only five to seven percent cane has so far been cultivated in Sindh. If production operations would have been smooth, growers would have cultivated some 50 percent cane by this month,” he said.
Growers have planted cane-seeds at an area of 750,000 acres in the province and estimated to harvest 18 million tons this year.

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