LAHORE -  Pakistan Sugar Mills Association has linked the sugarcane payments to growers to approval of sugar export with freight subsidy, as the mills are facing liquidity crunch.

The sugar millers observed that cost of sugar produced at government notified rate of sugarcane at Rs.180/40 kg is very high and it is not viable to export sugar, keeping in view the high cost of production and depressed world market. They said if current situation prevails, it was feared, mills will not have the ability to procure sugarcane at anything more than Rs.120/40 kg. However, if subsidy, as requested by Pakistan Sugar Mills Association, is provided the surplus stock will be exported and mills will make the payment to growers.

The millers have warned the government that next sugarcane crushing will not be started in time and it will remain impossible until the whole sugar stocks in the country are disposed of in the market.

The industry stakeholders observed that there are ample stocks of sugar available in the country which are sufficient to cater to the needs of the country till February 2018 and if these stocks are not sold the sugar mills will continue to face liquidity crisis.

The millers rejected the government’s current policy for not granting timely export of sugar, proposing the authorities to convene an immediate meeting in order to address concerns of the stakeholders in this regard.

The country, this year, has witnessed a mammoth rise in sugar production with a surplus volume of 1.8 million tons preceding the end of this crushing season. The representatives of PSMA (PZ) argued that unless these produced quantities are dispelled through exports, the industry will not be able to pay to its growers. Already, protests have started in some parts of Punjab where numerous mills have not cleared their dues and the situation shall worsen by the end of the coming crushing season when another bumper crop of sugarcane is expected, they said.

The government has a direct control over major cost component of production along with the output quantities of sugar in Pakistan and for this reason the industry is always dependent on policies that are being framed by the authorities. PSMA (PZ) observed that despite a frugal export allocation of mere 300,000 tons against a huge surplus already available, it was still impossible for the industry to export, without subsidy, keeping in view the current world commodity prices.

It was pointed out that world sugar prices, similar to other commodities, follow a cyclical pattern and in the early part of this calendar year i.e. January/February 2017, sugar prices were at a level where industry would have exported the surplus quantities without seeking any subsidy. But at that time, the authorities were too myopic to pre-empt the situation and refused to allow exports within that time frame despite repeated requests by the industry.