SUGAR MILLS VERSUS IMPOTENT SUGARCANE GROWERS

M.R. CHAUDHRY
May 12 - 18, 2008

Sugarcane is cultivated in more than 100 countries. Brazil, which produces 32.72 percent sugar-cane is the largest sugar producing country in the world while India, China and Mexico respectively produce 20.20, 7.23 and 3.63 percent of this crop and occupy the second, third and fourth position in the world. Pakistan, production-wise, occupies the sixth position. The world's production of sugar-cane is around 1391.43 million tons. Sugarcane crop in Pakistan occupies the largest area as compared to other crops.

Presently there are 80 sugar mills in the country. Their production of sugar solely depends upon the supply of sugarcane. Of these, 42 sugar mills are located in the province of the Punjab.

A quantity of 1.31 kg of sugar per capita is used per month in Pakistan. Punjab produces 68 percent of the total sugar quantity produced in the country.

Due to sufficient rains this year, the crop of sugarcane has been better. According to the initial data the sugarcane production this year is expected to be 133.53 percent more than that of the last year. In order to meet the local needs, Pakistan imported 586.5 (000) tons of sugar last year, which valued Rs.15,721.1 million.

During the month of March, the price of sugar in all the markets of the province of Punjab was slightly lower, which was 2.51 percent less. In the month of February, 2008 the price of sugar was Rs.2395 per quintal, which came down to Rs.2335 per quintal during March, 2008. This downward trend of price was because of the arrival of the new stock of sugar.

A comparison of prices of sugar in Punjab during March 2008, preceding month and of March last year is given in the following table:

PRICE PER 100KG

MARKET

PRICES OF MARCH 2008

PRICES OF FEB. 2008

PRICES OF MARCH2007

COMPARISON OF PRICES MARCH, 2008 WITH FEB, 2008

COMPARISON OF PRICES MARCH, 2008 WITH FEB, 2008

Lahore

2375

2431

2927

-2.30

-18.85

Faisalabad

2330

2398

2879

-2.82

-19.07

Sarrgodha

2331

2397

2867

-2.75

-18.69

Multan

2263

2328

2840

-2.83

-20.32

Gujranwala

2361

2428

2909

-2.78

-18,84

Okara

2332

2390

2878

-2.43

-18.96

Rawalpindi

2412

2468

2920

-2.30

-17.41

Rahimyar Khan

2278

2322

2845

-1.87

-19.92

Average:

2335

2395

2883

-2.51

-19.00

With the current installed capacity, the sugar mills can produce 5.5 million tones sugar.

The government as approved in principle by the Ministerial committee on Core Food Inflation, procured 0.4 million tones of refined sugar from private sector in April, 2008 as strategic reserve for the coming months to meet any shortage of the commodity created in the country. However, forthis purpose the Pakistan Sugar Mills Association (PMSMA) demanded the government to exempt GST on sale of refined sugar and also to reduce Rs.1 per kg as sales tax as consumer price.

PROBLEMS AND PLIGHTS OF SUGARCANE GROWERS

The small sugarcane growers depend on liquidity from the previous harvest for their crop circle as they have no option but to sell their produce to the middleman on his terms and conditions while the big landlords sell their sugarcane crop directly to the sugar mills. Small farmers, who sell their cane to middleman is paid Rs.35-40 per 40kg by middleman that is hardly equal to the cost of production, meaning thereby growers do not get any profit on the produce.

Crushing season 2007-08 began on November 15, 2007 and till December 31, 2007 total cane crushed was 340,629 tons, with average sucrose recovery of 9.2 percent and sugar production of 30,136 tons as compared to last crushing season, when the crushing amounted to 200,695 tons with average sucrose recovery of 7.88 percent and sugar production of 15,015 tons.

Through a notification the government of Sindh had fixed minimum sugarcane support price at Rs.67 per 40kg for the crushing season 2007-08 but Pakistan Sugar Mills Association (PSMA) under the pretext of continuous fall in sugar prices desired that the support price should be Rs.63 per 40kg.

It is still sad that after the arrival of the crop, the millers further exploited the position in their own favour by deciding to pay Rs.57 per 40kg with a plea that the sugar content (sucrose) was less than what they had expected. This is fallacious and baseless because the crushing season started in November and December when the sugar content is at the highest level i.e. 11.13 percent or more as compared to October and January.

The middleman who sells this product to sugar mills at Rs.57 per 40kg makes maximum profit of at least Rs.17 per 40kg. It is still agonizing that these growers who sold their cane to mills directly are still waiting for payment. This is causing great disappointment amongst the growers for no fault on their part.

Another usual problem of sugarcane growers is that very often sugar mills start crushing late every season, which delays the cultivation of wheat crop, naturally resulting in low yield of wheat. Sugar mills are therefore responsible for this low production and ultimate loss to farmers.

According to President Kisan Board NWFP Murad Ali Khan the sugar mafia was looting sugarcane growers in the province. The growers were denied payment at the government announced support price of Rs.65 per 40kg. The poor farmers, on the other hand, were being paid at Rs.30 to Rs.50 per 40kg. Beside payment at lower rates, the sugar mill owners also make 30 percent deduction per truck, which is a high-handedness on their part.

In order to cause unnecessary physical and financial difficulty to sugarcane growers, sugar mills at times stop crushing in the middle of the crushing when trucks and trolleys loaded with the product stand in the mills premises and on the roads. This is unethical business and against moral and human dignity.

There are a host of problems that the poor small farmers face. Although sometimes the government intervenes but outcome of such interventions do not bring any relief to growers as the sugar mills lobby has their men every where in the government machinery and assemblies to safeguard their interests. We can only wish and pray for rectification of the situation.