LAHORE - Majority of Punjab sugar mills are flouting the new sugarcane purchase payment system, devised recently by the provincial government on directives of the Lahore High Court, delinking recovery of cane with its minimum support price.

The new system asks the millers to pay at least Rs 170 for 40kg cane irrespective of its recovery ratio, however, when the recovery ratio surpasses the fixed level of 9.5 per cent, the farmers should be paid additional amount of Rs 1.70 for every 0.1 per cent increase in sucrose level, officials said.

On the other hand, the millers are not making full payment of Rs 170 per 40kg and deducting amount in the range of Rs 10 to Rs 20 per 40kg, as cane recovery ratio is less than 9.5 per cent, especially in upper and central Punjab.  The notification a copy of which is also available with The Nation states the new system will be based on the consideration of both weight and sucrose content in the light of the order of the LHC on November 26, 2012, and the chief minister’s approval on December 22, 2012, after consultation with the Sugarcane Control Board.

The notification further says the minimum support price of sugarcane already notified as Rs 170 per 40kg shall be for a baseline recovery rate up to 9.5 per cent sucrose contents which shall be enhanced at the rate of Rs 1.79 for every 0.1 per cent increase in sucrose contents above the baseline recovery.

The notification makes it clear that no deduction in the minimum support price of sugarcane will be allowed on the pretext of recovery lower than 9.5 per cent.

Agri Forum Pakistan has claimed that misunderstanding has been created by the media as well as the millers regarding the newly issued notification on sugarcane purchase system. Other farmers’ organisations have also voiced their concern.

Agri Forum Pakistan Chairman Ibrahim Mughal observed the new system stopped the millers from deduction in minimum support price on the pretext of recovery lower than 9.5 per cent. He claimed that most of the mills in Punjab were deducting up to Rs 20 per 40kg in payment for sugarcane. He calculated that farmers were being deprived of around Rs 6 billion as their additional sucrose ratio was not being considered by the millers.

He regretted that the sugarcane crop had been politicised by the politicians to exploit growers and sugar consumers. He alleged majority of the sugar millers were politicians who thought unjustified deductions in weight, delaying tactics in payments and other such dishonest methods their right.

He urged the government to adopt the method of paying growers according to the sucrose content in the sugarcane crop. He claimed that growers from Rahim Yar Khan and Bahawalpur could get additional Rs 6 billion per annum if their crop was bought according to the sucrose content. This money was going into the pockets of sugar mill owners, he claimed.

Mughal, while presenting various suggestions to improve the lot of sugarcane growers, said the cane procurement receipt (CPR) should be given the status of cheque and it should be made binding on the millers to pay to growers within 15 days of the procurement.

Mughal assessed that this year sugar mills would buy around 50 million tons of sugarcane whose price at the existing market rates was Rs 188 billion. Out of this sugarcane they could produce 4.5 million tons of sugar and its price was estimated to be Rs 235 billion. “It means millers will buy sugarcane from the growers against deferred payments, sell it on cash and earn around Rs 50 billion by selling sugar and other by-products,” he claimed.

It is to be noted that the sugarcane support price has created a wave of uncertainty among farmers and sugar millers across Punjab as the former believe that the price will not even cover their cost of production and the latter consider it higher.

The Punjab cane commissioner had set the support price at Rs 170 per 40kg for 2012-13, an increase of Rs 20 or around 13% compared to the previous year’s price of Rs 150 per 40kg.