LAHORE - The Indian government is doling out rebate of $64 per ton on sugar export, besides providing Rs660 billion as interest-free loans to help and support sugar industry to make payments to sugarcane growers. Moreover, the cost of production is also lower in India compared to Pakistan due to low power tariff, less wages and several kinds of subsidies on agricultural inputs.
On the other hand in Pakistan, export parity at the moment is Rs 36 as against cost of producing sugar of Rs. 60 per kg at Rs180/40kg sugarcane which leaves a deficit of Rs. 24 per kg, stated Pakistan Sugar Mills Association Punjab Chairman Javed Kayani. It is therefore impossible to make payments to sugarcane growers when the industry is not in a position to recover the cost of sugarcane, he added.
He said that under the circumstances sugar industry is justified to ask for support from the government when sugarcane prices is fixed unilaterally for political expediency without taking into account the international scenario. The rebate of Rs. 8 and inland freight subsidy of Rs. 2 will only partially offset the losses.
Government should take every decision considering the interest of both the growers as well as the industry so that payments to growers can be made through export of sugar for which there is no buyer in the local market while the initial tranche of 650,000 tons sugar will fetch $300 million in foreign exchange. However, disposal of surplus will stabilize price of sugar in the domestic market, which is currently at 47/48 per kg far from break even level of Rs. 60 per kg.
“Increase in support price of sugarcane by the government every year has resulted in enhanced production. Sugar mills are obliged to crush the entire sugarcane crop therefore surplus sugar is not made by choice. Now to make payments to sugarcane growers it is mandatory to sell sugar. Sugar is produced in about four months and sold through out the year with surplus looming price of sugar remains depressed and forced selling continues in the market to discharge liabilities to growers. Government also enforces provision of sugarcane Act of 1950 to make payments within 15 days from the date of purchase of sugarcane. This Act though redundant under the present circumstances yet the provision of payment is strictly invoked.”
He demanded the government to support the industry, which is producing an import substitute of about $2.5 billion, paying taxes over Rs. 20 billion and facilitating growers by purchasing sugarcane of Rs250 billion every year.