Sugar mills in Sindh to resume production amid pricing dispute

KARACHI: Mills in Sindh will resume sugar production by next week after the provincial government on Friday warned millers that it will take legal action against them if they do not start production, officials said.
““Without prejudice to their rights … and in the wellbeing of the sugarcane growers and greater national interest, the Sindh sugar mills management have decided to resume their operations and start crushing sugarcane with effect from midnight Monday,” Pakistan Sugar Mills Association (Sindh) said in a statement.
Officials said the provincial Chief Minister Qaim Ali Shah told the millers that the government would take legal action against them unless they started work immediately.
“The CM has warned them that their mills will be sealed as per the laws if they do not resume production,” said Rasheed Channa, media consultant to the CM. “The law permits the government to take over those mills, which will not resume production after the instruction...the government will run the mills if it find canes lying at the factory,” he said.
Around 32 mills in Sindh stopped operations on Tuesday following a bitter dispute over cane prices that threatened to disrupt the refining season in the province. Mill owners have been pushing for lower cane prices amid domestic sugar gluts while they also asked the government to subsidise sugar production this season.
Such price disputes are common each crushing season, but this year they were more intense in Sindh.
The mill owners demanded the government to revise the cane support prices to Rs155/40-kilogram in the province from Rs182/40-kilogram. The current cane price, millers said, was unplayable as sugar prices in the domestic market have fallen, leading to mounting losses. They also demanded to subsidise sugar production this season.
Ex-factory sugar price, dictated by the market forces, is quoted at Rs49/kg.
Channa said the government has also instructed the owners to buy sugarcane at the mandatory fixed price of Rs182/40kg.
The millers’ statement said sugar mills management has been requested by the government of Sindh to resume their operations and commence sugarcane crushing.
“This decision has been taken as a gesture of goodwill and good faith, and it is expected that the government of Sindh and the other stakeholders will respond and reciprocate accordingly,” it added.
“The unbearable crisis in the sugar industry has to be resolved immediately, as it cannot tolerate any further delay.”
The statement said the management of sugar mills reiterates that the interests of the growers and the mills are inseparable and they must stand together.
“The Singh government is also a relevant stakeholder and must contribute in resolution of the serious problems,” it added.
The mill owners have filed their case in the Supreme Court in which they said the government should fix sugar price like it does for the cane.
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.
The country’s sugar consumption is pegged at around 4.6 to 4.7 million tons, and it started the 2014/15 year with around 800,000 tons of stock. This season the country is expected to produce 5.7 million tons of sugar.