Mills fail to clear dues of sugarcane growers despite SC order

LAHORE – The sugar mills in the country have failed to make full payments to sugarcane growers on the orders of Supreme Court of Pakistan as more than 30 percent payments are still pending for the recently closed crushing year of 2017-18.

On April 25, the Supreme Court of Pakistan had ordered owners of sugar mills in Punjab and Sindh to clear dues of sugarcane farmers for the ongoing season within 5 weeks.

Though the Pakistan Sugar Mills Association did not respond officially regarding the payment of outstanding dues to the growers on the order of the court but industry sources said that mills are not in position to make the full payments in time, as they are facing severe liquidity crunch due to over production and declining prices of the sugar in global market.

They said that prices of sugar at local level have also been declined in retail market in the month of Ramazan when almost every commodity’s rate has seen upward trend. Presently, the rate of sugar has dropped to Rs55 per kg from last year price of Rs65 per kg, they added.

“There is no effect of Supreme Court action as the court had passed orders without keeping in view of the real circumstances of the sugar market,” observed Agri Forum Pakistan chairman Ibrahim Mughal while talking to The Nation. “Under the Cane Act, the Supreme Court cannot restrict the sugar millers to make the payments. The Act allows the millers to make payments to farmers within the 15 days of CPR (Cane Purchase Receipt) and if it is late the millers have to pay the mark-up.” But the present situation is that crushing season has ended by the March 15 but almost 30 percent payments are pending, he said and added that there is no chance of payments during another one month, as the owners can pay only by selling their mills.

Ibrahim Mughal was of the view that disposal of additional sugar is duty of the government. The govt should allow export of the sugar to ensure timely payments to growers. He said that process of buying of sugar from the mills by the TCP was pending for a long time and millers were making it an excuse and delaying payments to the cane growers.

Farmers alleged the delay by the TCP in procurement of sugar was causing hardships for around 1 million families associated with sugarcane growing in the country.

Industry sources said that more than nine mills have been declared bankrupt while four are in shutdown position because of the indifferent attitude of the government towards the plight of sugar industry.

The government will have to prepare an effective mechanism to dispose of the surplus production of 3 million tons of sugar, announcing a permanent export policy with an appropriate rebate and tax adjustments to meet the international prices by the local sugar industry. It would enable the sugar millers to clear payments to the sugarcane growers. The millers by law have to start crushing season maximum by November 30, but it is not possible unless an effective mechanism of disposing the surplus is devised by the government.

They said that the country’s domestic consumption is only 5.5 million tons, leaving the industry with about 3 million tons of surplus sugar if it is not exported, rendering the mills unable to clear dues of the cane growers.

It is to be noted that last year the Sugar Advisory Board had also proposed the government to allow sugar export of 1.5 million tons. The board, comprising of officials of ministry of production and industry, had also recommended the Trading Corporation of Pakistan to purchase another 1.5 million tons of sugar through tender process.

Industry stakeholders said the government needs to revisit the mechanism of export subsidy. Currently, the government offers Rs10.7 per kg as subsidy which is not feasible. Earlier, the subsidy was Rs13/kg. They said that sugar mills are feared to default on paying a huge amount of billions of rupees to the growers as government’s indecisiveness to allow sweetener’s exports on desirable rebates created liquidity crunch in the industry. They said that delay in decision of export every year costs heavily to the government, growers and industry which may lead to anarchy and lawlessness in next season.

The sugarcane growers have already given a protest call against non-payment of their dues by the mills. They have also announced to hold a sit-in in front of the Supreme Court of Pakistan in Islamabad if the sugar mills owners continue to refuse to pay them the notified rate for their crop. They warned of staging a protest rally outside the PM House to convey their grievances to the caretaker government about the injustices being meted out to them.

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