Pakistan Sugar Mills Association (PSMA) has drawn the attention of the government towards the fact that the crisis is deepening in the sugar industry with every passing day and is pushing the industry towards a total collapse.
According to a spokesman of the Association, in a letter written to Provincial Cane Commission, the PSMA Punjab has drawn attention of the provincial government towards worsening crisis in the sugar industry due to falling sugar prices in wholesale markets, further announcement of subsidy on sugar prices at utility stores, crash of molasses market, loss of faith in Federal Government's commitment and understandings.
All these factors, added the letter, have jeopardised the survival of the industry and its implications will adversely affect the start of next crushing season. Thus, the industry has reached a point where it is simply impossible for it to ensure minimum payment of sugarcane support prices announced by the Provincial Government for the coming crushing season.
It has been brought to the knowledge of provincial cane commissioner in the letter that PSMA had clearly indicated last year in the month of June, in a meeting headed by Provincial Ministers Committee that sugarcane price from Rs 45 per 40-kg could maximum be increased to around Rs 48 per 40-kg.
Any further increase will endanger the viability and survival of the sugar industry and if at all Government decided to increase the sugarcane price, then the industry would not be able to fulfil its obligations to financial institutions, government taxes and growers dues.
The letter stated that non-friendly sugar policy of the Federal Government since 2005-6 had put the industry into a deep crisis. Off-loading of imported sugar in open market through utility stores and bulk tenders at subsidised rates (from taxpayers money) well before the start of the crushing season engulfed the industry into heavy losses.
The letter further mentioned that 1.2 million tons of high cost sugar stocks were available with the sugar mills and TCP at the start of new crushing season (2006-7). This raised doubts in the government mind that at prevalent sugar prices (downward trend in domestic and international markets), the industry would not be able to fully pay to the growers, the newly enhanced support price of sugarcane.