Sugar crisis was expected after a poor cane crop

Post Source: The News International Friday, August 21, 2009

By By Farhan Zaheer

KARACHI: The government has failed to maintain sugar prices despite clear expectations of a bad sugarcane crop right from the beginning of this year.

With all the known facts, nothing was done on the part of the government to save the two parties that have been on the losing end — cane farmers and sugar consumers, Ishaq Khakwani, former Minister of State for IT and Telecom told The News.

Amid the worst sugar crisis in the history of the country, consumers are compelled to buy sugar at highest-ever prices from Rs50 to Rs55 in different parts of the country.

The cane procurement season starts in December and ends in March every year. This year sugar millers got cane at Rs80 to Rs100 per maund from farmers and the millers had finalised their end-product at Rs25 per kg, including all expenses and profits, he said, adding that this was the same rate on which the millers provide sugar to the Trading Corporation of Pakistan (TCP).

What is shocking is that the TCP is now providing that same sugar at Rs38 per kg to the Utility Stores Corporation (USC) all over Pakistan and says that the government is providing subsidy on sugar; conversely the government is earning Rs13 per kg, he added.

Saeed Ahmed Khan, TCP Chairman talking to The News said “we purchased sugar at Rs34 per kg from millers in January 2009 and not at Rs25 per kg, the prices reached Rs37 per kg in July 2009 and we are now providing the commodity at Rs38 per kg as per the government’s decision.

He said: “TCP bought sugar at different rates from different mills; what had actually increased the prices were the mark-up rates on loans with which we buy the commodity. TCP has to repay bank loans on time to get sanctioned other loans and this is an ongoing process, which also pushed the prices up.”

What is pertinent to note that why government did not take notice of the rising sugar prices in the early stages.

It was evident from December 2008 that the sugarcane crop would be affected this year. With this entire hike in prices that is from Rs25 per kg to Rs55 per kg, there is also the profit shares for farmers who sold their crop to the millers at Rs80 to Rs100 per mound, Khakwani observed.

Khakwani also said that in March-April 2009, white sugar price was Rs42 per kg and despite the indication of Ministry of Food Agriculture and Livestock (MINFAL) government did not import sugar.

TCP says that it has no role in sugar crisis owing to fact that TCP orders sugar import as per the government instructions.

Millers say that federal government and TCP were responsible for the crisis by not importing sugar at the right time despite their demands, especially TCP should have maintained a 700,000 tons of sugar buffer stock to overcome any challenge.

Despite all the government claims sugarcane cultivation area and per area yield in Pakistan is virtually standstill.

Millers claim that their cost of production has been increased in last couple of months and this year farmers provided cane at high rate that is Rs100 to Rs140 because they knew that the crop was bad and hence they earned more on these rates.

But, Khakwani declined the miller claim saying that millers have been earning over 135 per cent profit on one kg of sugar. Present retail sugar price is Rs55 per kg compared to Rs25 per kg, the production cost including profit on which millers buy cane from farmers this year.

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