Accepting demands of the millers may help sorting out the situation

Nov 17 - 23, 2003

Delayed crushing by the sugar mills for the current season may entail serious economic implications especially on the agriculture sector in Sindh. Syed Qurban Ali Shah, president of the growers association while speaking at a press briefing warned that late start of the crushing by the sugar mills may lead to a shortfall of a 3 million ton of wheat crop of winter season, possibility of reduction of under cultivation area for sugar cane next season as well as damage to the standing cane crop.

It may be noted that as a result of negotiations between the sugar millers and the government, it was earlier decided that the sugar mills will go into production from 1st of November, the date was extended to Nov 15 as the sugar millers were reluctant to go into production unless the unsold stock of the sugar was lifted by the government. Now the deadline for start of the crushing has been fixed on November 30.

The sugar millers were taking plea of facing serious liquidity crunch for not going into production. They are of the view that over Rs9 billion were held due to held inventory of unsold sugar, they were unable to pay the dues of the growers.

The situation took a new turn when the provincial minister for agriculture allow downward revision of the support price from Rs43 per 40 kg to Rs41 which sent a wave of agitation among the growers who have started demonstrating against unilateral decision of the minister for reduction of support price.

Syed Qurban Ali Shah expressed his apprehensions that at present the farmers were caught in a perplexed situation in which neither they are able to harvest the crop nor they can water to the crop to save the land for next wheat crop. However, if the water was not given, the standing crop may go dry for want of moisture. On the other hand watered land was not advisable for sowing of the wheat crop. This state of uncertainly may have serious implications for next wheat crop he reiterated. These are the affairs which may force the farmers to reduce the area of cultivation for sugarcane crop next year.

Earlier, the government had agreed to lift at least 100,000 tons out of the unsold stock and will pay 70 percent down payment of the lifted stock. However, on the constant demand of the millers, the government has agreed to pay 85 percent of the down payment for the sugar to be lifted from the stock. And the government also agreed to do away with levy of 10 percent interest and 25 percent penalty for failure on part of the mills in clearing dues to farmers. The farmers claim that millers have to pay dues worth over Rs3 million.

The growers were however unhappy over the situation and stage demonstration in front of Sindh Assembly and the Karachi Press Club against what they called connivance between the millers and the provincial government. They have charged serious charges of corruption and have asked NAB to intervene into the situation.

On the other hand, the fresh development of accepting demands of the millers may help sorting out the situation as the payment to the millers by the TCP will enable the millers to clear dues they owe to the growers. The growers however can start wheat sowing provided the sugar mills start lifting the cane crop and pay dues to the farmers.

On the recommendation of the Ministry of Commerce, the Economic Coordination Committee has authorized Trading Corporation of Pakistan (TCP) to initial payment of 85 per cent of the sugar lifted from the mills.

The situation was still complex because of conflict of interest between the millers as well. Out of the total unsold stock of sugar, the sugar mills in Punjab claim they have a stock of 338,000 tons while the remaining stock is lying in Sindh which makes the total inventory of 430,000 tons. Punjab mills also demanding that there should be no quota for lifting of the stock from Sindh. On the other side, mills in the province of Sindh say that they produce more than the actual requirement of the province and have to face a surplus every year. There is a need for permanent solution of the surplus sugar in Sindh, otherwise the strong industrial base in this sector may suffer serious erosion and economic disaster if the situation of uncertainties goes on in future also.

It is interesting to note that both the growers and the sugar mills time and again claim that the sugar crisis was a pure economic issue and has nothing to do with any sort of politics. It is a matter of interest that representatives of growers and the sugar mills both are active politician in the province of Sindh as well as Punjab both were over emphasizing that it's a pure economic issue. This however sounds interesting when active politicians involved in a issue say that there is nothing political in that issue.

On the industrial side, there are a few industries, which offer considerable support to the economic growth of the country. However, it is unfortunate that both textile as well as the sugar industries is currently suffering from internal conflicts which obviously make adverse impact on the overall performance of the two sectors.

Cotton textile, sugar, rice are the few sectors extremely important for economic survival of this country. There is an immediate need to evolve a pattern for the active segments of the economy to enable them to move smoothly in future as well.