LAHORE: Pakistan’s apex trade body has advised the government against fixing of ex-mill sugar prices in the Punjab and Khyber Pakhtunkhwa based on its own assessment and to rather appoint independent auditors for evaluation, it was learnt on Monday.
The federal government is about to freeze retail sugar price in Punjab and Khyber Pakhtunkhwa as sugar prices have exorbitantly increased, according to the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).
“If the federal government wants to fix the price of sugar, the task may be assigned to four independent chartered accountant firms instead of government functionaries,” Nasir Hyatt Maggo, president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in a letter to the Prime Minister Imran Khan.
“Pakistan Sugar Mills Association must be taken onboard for all such processes, otherwise it will have adverse effects on the sugar industry not only during current year, but next year and beyond could prove to be a disaster.”
The current sugar crisis is linked with the government’s exports decision. The export caused a shortage in the country and the government then had to import sugar by spending about $45 million. Exorbitantly high cost of sugarcane crushing in Pakistan leads to increase in sugar price at the retail level. Cost of production in the Punjab sugar mills reached Rs106 per kilogram due to high sugarcane prices compared to the Punjab government’s support price of Rs 200 per 40-kilogram.
However, critics said the sugar mills also generate income from sale of molasses, bagasse, press mud or imputed value and ethanol.
The Pakistan Sugar Mills Association (PSMA) Punjab Zone has already rejected the rates calculated by the federal and provincial governments for fixing sugar prices.
Maggo said sugar industry has been time and again reporting the matter to ministry of industry and governments of Punjab and Khyber Pakhtunkhwa about the high prices of sugarcane manipulated by middlemen, but the ministry took a stand that sugarcane price for Rs200/40kg is the minimum price, whereas the actual market price of sugarcane had to be determined by the market forces.
“Government of the Punjab too no action against middlemen involved in increase of sugarcane prices to an abnormal level detrimental to the interest of sugar industry and sugarcane growers,” he said in the letter copy of which sent o finance minister, minister of industries and production, commerce adviser, and Punjab chief minister.
FPCCI president said Punjab and Khyber Pakhtunkhwa fixed support price of sugarcane at Rs200/40kg, whereas procurement rate reached up to Rs360/40kg during the season. The average sale price of sugarcane is reported as Rs282/40kg for some mills, whereas average sugarcane price comes to Rs265/40kg. Sugar mills in the Punjab and Khyber Pakhtunkhwa paid Rs85 billion and Rs7 billion extra for procurement.
“Ministry of industry has started to determine the price of sugar unilaterally without consulting the sugar mills or stakeholders. Such unilateral fixation of prices is inflicting heavy losses to sugar mills, which may result into non-payment to growers, government and bankruptcy of sugar mills,” said FPCCI president.
