26 sugar mills have halted production in Punjab as they refused to buy sugarcane at higher prices. The closure of sugar mills is causing lot of economic problems to farmers-especially small farmers will suffer the most. The sugar mills have stopped buying sugarcane from farmers in the middle of crushing season.
The closure will not only increase the problems of farmers but also the consumers. The sugar prices could increase if mills further delay the crushing. Only eight mills were running in Punjab so far. The crisis is in the making as the result of mills closure.
The powerful sugar mill owners have joined hand to bring down the prices of sugarcane. It was pointed out in the cabinet meeting recently that most members of the Pakistan Sugar Mills Association had colluded in order to close their mills as the sugarcane purchase price jumped to Rs225 per 40 kg compared to the official support price of Rs190 per 40 kg.
The Competition Commission of Pakistan (CCP) has also pointed out the existence of cartel in the sugar industry. The sugar mill owners joined hands to exploit both the consumers and farmers. They operate as a cartel to push down the prices of sugarcane and on the other hand increase prices of sugar. The CCP blamed the sugar mill owners for manipulating the prices of sugar and sugarcane.
On the other hand, Pakistan Sugar Mills Association has categorically denied the existence of any cartel in the sugar industry and held the middlemen responsible for the crisis.
Middlemen were selling sugarcane to the mills at higher prices of Rs250 per 40 kg,” he said. “How sugar mills can operate at such higher rates when the ex-factory sugar price stands at Rs80 per kg,” he asked and suggested that sugarcane prices should be linked with the recovery of sugar from sugarcane. He was of the view that the government should fix ex-factory prices of sugar.
The government hasn’t intervened yet to start the crushing season. The mill owners have already conveyed to the government that sugarcane crisis will further aggravate in days to come. The government needs to act immediately to resolve the issues. This crisis could aggravate and develop a new sugar crisis.
The issue of sugarcane price always remains a bone of contention between various stakeholders in sugar industry in Punjab as well as in Sindh, two major sugarcane producing provinces of the country.
The mill owners resorted to delay in beginning of the crushing season of sugar mills to get advantage of the weak bargaining position of the farmers. The farmers complain that the Punjab sugar mills owners and other quarters having vested interest in the industry use tactics to delay crushing season and not increasing procurement rate, which results in economic problems for farmers and crisis for the workers of sugar industry.
The growers and sugar mills owners remain in a constant dispute for last several years over the issue of fixation of sugarcane price, long delays in release of payments to growers and clearance of liabilities by factory owners.
The farmers have to wait for months to get the payment from sugar mills. The powerful sugar mill owners used one lame excuse after the other to delay the payments. The farmers grow the cash crop to get instant money. They have to pay back the loans they obtained to buy fertilizers and pesticides. The delay in payments seriously affects the rural economy.
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