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November 28, 2018

Sugar mills demand export subsidy amid crushing delay inquiry

Business

November 28, 2018

LAHORE/ISLAMABAD: The federal government has summoned office bearers of Pakistan Sugar Mills Assocaition (PSMA) today (Wednesday) in Islamabad over their failure in initiating sugarcane crushing season, while the millers are demanding immediate export subsidy, citing high cost of doing business, The News learnt on Tuesday.

The Ministry of National Food Security and Research has asked the PSMA officials to attend the session so that issues discussed during the meeting of Economic Coordination Committee of the Cabinet could be conveyed.

The today’s meeting would ponder issues relating to sugarcane liquidity and payments defaults by the mills.

A letter, written in this connection, has been sent to the PSMA and other stakeholders.

It is explained in the letter that Economic Coordination Committee (ECC) of the cabinet in its meeting held on November 22, 2018 discussed in detail the issues of sugarcane price mechanism, cost of production of sugarcane and sugar, sugar mills liquidity situation and outstanding liabilities.

After detailed deliberations, it states, the ECC directed the Minister for National Food Security and Research to convene a meeting with Pakistan Sugar Mills Association (PSMA) in the presence of the Advisor of the PM on Commerce, Trade and Industries and other stakeholders, including representatives from Ministries of Finance, Commerce and MOIP, FBR, State Bank of Pakistan etc.

Meanwhile, the PSMA has demanded of the government to provide them with subsidy on sugar export, adjust sales tax, and determine cane price judiciously.

Aslam Faruque, Chairman PSMA, in a press conference, said ex-mill sugar price was Rs47/kg, while tax was being charged at the presumed price of Rs60/kg.

“Besides, mismatch between the cane and sugar price is also making it unfeasible for the millers to start crushing,” Faruque said.

He said the provincial governments have fixed the sugarcane price at Rs180/40kg, whereas taxes were high and local price of sugar was depressed.

“How can we start crushing? How can we bear the loss of Rs15/kg of sugar when there is an outstanding amount Rs16 billion that the government stills owes us,” Faruque said. “We have no issue with growers. We have cleared 99 percent of their outstanding dues. We want the growers to get more than what is the current price of cane, but the government should also give us a good rate for sugar, while keeping in mind the growth and viability of this industry,” He added.

“Give us a good rate of sugar [locally] or give us subsidy to clear the surplus through exports.”

He said they request the government to come up with a sugar export policy so that we could export the product when it was in surplus. “The government, through a policy, should make the mills responsible in case of shortages, they will fill the gap,” he said demanding that the price of sugar be increased to Rs65/kg to make the business feasible. The PSMA chairman said currently, they had 1.5 million tons of surplus sugar, and they expect to produce another 6.5 million tons during this new season.

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