ISLAMABAD (January 16 2004): Sugar industry is in serious trouble due to lowering prices of the commodity and soaring unsold stocks. The mill owners say that they were not in a position to continue with the faulty policies of the government any more, which has posed serious threat to the very survival of the industry.

In their opinion, fixation of sugarcane price by the government without setting minimum sugar price and heavy taxation were major reasons of industry's trouble.

On the same pretext, the mill-owners were reluctant to enter into fresh crushing this year.

However, they agreed to move in after an assurance from the authorities that their surplus stocks would be picked-up by the government to either export or maintain buffer stocks.

After completing the first month of crushing, the industrialists have strong feelings that the government was not fully honouring its commitment of buying commodity through the Trading Corporation of Pakistan (TCP).

Start of the new crushing operations has brought down commodity prices to their lowest-ever ebb. Ex-factory prices of sugar, which ranged between Rs 17 and Rs 18 per kg ahead of crushing season 2003-04, have lowered down in Sindh and Punjab to Rs 16 and Rs 16.50 per kg, respectively.

The industrialists say that with the lowering down of the prices in the open market, each kg of their production was causing them loss of about Rs 2 and this loss can not be tolerated for long.

According to the Pakistan Sugar Mills Association (PSMA), the millers had produced 0.906 million tonnes as on December 31, 2003.

Out of net production, 0.319 million tonnes were lifted by the buyers, whereas 0.587 million tonnes are available in millers' godown.

Majority of mill-owners calls the new situation as alarming and believes that its continuity would subsequently erode the entire sugar industry and, of course, leave other stakeholders in wilderness.

The growers, whose economic prosperity lies in timely payments by the millers, along with the millers, would also be at the losing end.

The banks, major source of finances for the mill-owners working capital, would be prone to serious crisis as such situation can add heavily to their stuck-up loans.

Commenting on the present state of affairs of the sugar industry, Iskander M Khan of PSMA said, "We have reached the conclusion that present situation where millers were incurring huge losses would play havoc with the industry. The crisis calls for more pro-active role of the government to save the industry from collapse."

He added that the PSMA was making desperate efforts to have a meeting with Finance Minister Shaukat Aziz to apprise him about the worsening crisis of the sugar industry and its fallout."

Iskander Khan, who had been painting positive picture of the sugar industry and hoped for good results, is now a dejected man. While talking to Business Recorder at his office on Thursday, he repeatedly questioned the role of the government in the case of sugar industry.

He wanted to know why the government was not giving due priority to sugar industry, which contributes billion of rupees to the national exchequer in the form of taxes and duties, besides providing jobs to a large number of families.

After a short break, he recollected his ideas and said, "The crisis of sugar industry is taking a turn for the worse, and if the government did not respond to the situation on war-footing to save it from complete collapse, it (sugar industry) would exist no more."

Khan said that the sugar industry demanded of the government a balanced approach towards the sugar industry "so that it could continue with its business of meeting sugar demand of the country at a reasonable price."

According to him, the only workable option with the government to steer the industry out of crisis was to allow export of at least 0.3 million tonnes of sugar.

The PSMA would press for its demand when its representatives meet Finance Minister Shaukat Aziz.

Khan maintained that the PSMA would keep export of surplus stocks at the top of its agenda for the meeting.

Other issues; which it intends to raise with the Finance Minister are reduction in taxes/duties and timely payments to its millers by the Trading Corporation of Pakistan for commodity sold to them.

Courtesy Business Recorder