Sugar millers warn of shutdown over price issue

ISLAMABAD: Sugar mills feared a halt in production within a week due to limited supply of sugarcane, indicating a reversal in recent recovery in large scale manufacturing, it was learnt on Friday.

Pakistan Sugar Mills Association (PSMA) said farmers are demanding high sugarcane prices compared to the price of Rs200 per 40 kilograms notified by the provincial governments.

“Owing to the current scarce supply of sugarcane, it is feared that sugar mills facing shortage of cane will be forced to shut down their units within a week,” Iskander Khan, chairman of PSMA said in a letter to the Minister of Industries and Production Hammad Azhar.

“We seek your kind intervention for resolution of the problem through the district administration to ensure regular supply of sugarcane at notified rates to ensure reasonable price of sugar to consumers.”

Sugarcane growers from Sindh demanded the provincial government to fix the price of the commodity at Rs300/40 kilograms as the cultivation cost has increased.

Growers said several sugar mills have yet to pay arrears to growers since long. The authorities should assure payment of arrears and take action against defaulted sugar mills, they said.

Sugar, being an industrial crop, has a significant contribution to large scale manufacturing (LSM). Usually, its crushing reflects in LSM index of November onwards. The downbeat crushing leads to paring of numbers from the LSM that rebounded 3.7 percent in July-August after consecutive contraction for the past two fiscal years.

PSMA said growers have not started sugarcane harvesting in most parts of the country.

Sugarcane (autumn), sugarcane (spring), and sugar beet are harvested between September and December. Sugarcane is grown over approximately 1.25 million hectares and provides the raw material to 84 sugar mills.

Sugarcane crushing commenced in Punjab and Sindh from November after the governments announced penalties to be imposed to discourage delay in timely production.

Recently, the Federal Board of Revenue issued show-cause notices to 29 sugar mills after obtaining third party information about undeclared transactions made through banking channels.

A tax office estimated around Rs150 billion would be recovered under the income tax liability after completion of the scrutiny, which will be completed by end of this month. The tax department detected major discrepancy in purchase of sugarcane by mills. There is no withholding tax in case sugar mills directly purchase sugarcane from growers.