Sugar mills put on hold Rs44bln of growers in Sindh

KARACHI: Sugar mills are showing reluctance in paying Rs44 billion related to sucrose recovery incentive to the growers in Sindh in contravention of court orders, people familiar with the matter said on Friday.

Growers won a case against sugar mills of sugarcane quality premium on sucrose recovery against the mills, which are yet to start payments.

Farmers in the province achieved higher recovery rates for sugarcane varieties owing to suitable weather conditions in contrast to lower than global average recovery in other parts of the country.

Nawab Zubair Talpur, president of Sindh Growers Alliance told The News that they had won a case of quality premium of sugarcane sucrose recovery from the Sindh High Court and later the Supreme Court, “but sugar mills are not giving us any incentive”.

Sugarcane contributes seven percent to the GDP.

There are 89 mills in the country, of which 30 sugar companies are listed on stock exchange. There are 32 sugar mills in Sindh. Sugar production of country is 6.5 million tons annually while its consumption is around 5.5 million tons annually.

Cost of production remains higher in the country. Government gives higher amounts of subsidy to sugar mills to incentivise exports, as sugar prices in the international market are lower than Pakistan.

Various governments provided subsidies to sugar mills for passing them on to farmers, but they did not do it for many years. Growers were often denied minimum support price.

In 2014/15, support price of sugarcane was decided at Rs172 per 40 kilograms in Sindh, while sugar mills gave Rs162/40kg to growers.

In 2015/16, the rate was fixed at Rs172, but sugar mills provided only Rs160/40kg to the farmers. In 2018/19, support price was fixed at Rs182/40kg, but growers were given Rs150 to Rs160. During the current season, the rate was fixed at Rs192, but due to shortage of sugarcane, mills made purchases on higher rates of up to Rs300/40kg.

Industry sources they have still earned Rs6 per kg of sugar during the current season. Growers said sugarcane crop gets ready by November in Sindh and officially mills have to start crushing by November, but they usually delay crushing by one or two months, which affects weight of sugarcane in the province.

Government support to sugarcane prices in the shape of minimum support price guarantees a better return to farmers, leading to increase in area under cultivation. However, regular delay in payments to growers and water shortage result in lower area under cultivation and yields.

Punjab accounts for 65 percent of sugarcane area, Sindh 25 percent and Khyber Pakhtunkhwa only 10 percent.

Sindh growers are not organised and grower bodies are not untied. Small growers suffer a lot as they have no means to reach out to higher authorities. They appealed to the Supreme Court of Pakistan and higher authorities for recovery of their billions of rupees.