Gur’s Sweet solution

Sweet solutions

By Tahir Ali

(The News, 7-02-10)

As many farmers have started using their sugarcane to make gur instead of sugar, the practice does not bode well for sugar millers in FATA. Some sugar mills in the frontier, especially those in central districts, have closed or have stopped crushing sugarcane much before schedule. While sugar mills in Dera Ismail Khan and other southern districts of the province are operating, most of them in Peshawar, Charsadda, and Mardan, have been closed for good or have stopped crushing because they have already consumed their stock of sugarcane. Frontier Sugar Mills and Khazana Sugar Mills in Mardan, for instance, are already closed while the Premier Sugar Mills in Mardan — reportedly the biggest sugar mill in Asia — has also stopped crushing.

A high-ranking official of a big sugar mill in the area, on the condition of anonymity, says increased sugarcane price is the biggest problem, “Farmers are demanding high prices for their sugarcane which is simply not viable for us. We are giving them more than the official purchase price but they insist for more and are not bringing sugarcane to the mills. We cannot run our mills in this situation.”

The official rate of 40kg of sugarcane is Rs130 locally as compared to Rs100 last year. Despite this price, there is limited sugarcane supply to mills because the gur mafia purchases the standing crop at Rs180-200 to make gur from it. Farmers either sell their crop to them or opt for making gur from sugarcane.

General Secretary Pakistan Sugar Mills Association, K Ali Qazalbash, claims farmers were offered between Rs140-200 per 40kg of sugarcane on different stations. But they demanded more than that which was simply not affordable for the millers. That was why several mills were closed down,” he says adding, “Seven out of 82 sugar mills were located in FATA. I cannot say exactly how many of these are closed nation-wide. But one thing I know for sure that sugar millers in FATA are faced with the problem of reduced supply of sugarcane as farmers prefer making gur from their crop. They prefer it because it fetches them more income as more gur can be produced from a given quantity of sugarcane than sugar,” he adds.

“Gur prices have gone up considerably and the commodity is being traded at around Rs80-100 per kg these days. It was cheaper than sugar two years back. But no one is questioning and investigating the issue. It is ironical that gur price is being determined by market forces while sugar prices have been determined by administrative decision,” complains Qazalbash. According to Qazalbash, sugar prices are going up internationally. Sugar prices must be around Rs60-65 per kg,” he argues.

There is no tax on the gur trade. The previous government had levied a fixed tax on gur ganees which was latter withdrawn after facing opposition from farmers. The Pakistan Sugar Mills Association NWFP chapter has been asking for a ban on the export of gur and for a 15 percent sales tax on gur industry. “Gur exporters earn huge chunks of money from exports to Afghanistan and Central Asian Republics (CARs) where it is used in wine-making and other items. Why has its export been allowed when there is shortage of sugar in the domestic market and the government spends billions on its imports?” says Qazalbash.

Haji Niamat Shah, Senior Vice President of Anjuman-e-Kashtkaran NWFP, however, says mills were offering prices of Rs150 to Rs175 per 50kg for different categories of sugarcanes as against official rate of Rs130 per 40kg. “Farmers are not bringing their produce to mills because they can earn more from gur-making. The result is that sugar mills have stopped crushing before schedule. It means revenue loss to the government, joblessness, and shortage of sugar in the market.”

On the suggestion to impose taxes on the gur sector, Shah says that the demand is unjust and would affect the already overburdened 85 percent poor farmers, “Instead, farmers should be offered incentives for bringing their sugarcane to the mills. For this purpose, the government should announce a relief package and a rebate in taxes for NWFP sugar industry which in turn would increase sugarcane prices for farmers. This would revive farmers’ declining interest in bringing sugarcane to the mills.”

Growing an estimated one million hectares of sugarcane annually, Pakistan is the 5th largest sugarcane producer of the world. Gur and seed consume an estimated one third of the produce. According to an estimate, 1.5 million tonnes of gur is annually produced in Pakistan. Some even claim the yield is two million tonnes. In 1996-97, it was estimated that 32 percent of the sugarcane crop was diverted for the production of an estimated 1.4 million tonnes of gur.

Gur prices have gone up sharply this year. The price of two purs of gur, weighing 160 kg, is between Rs9500 to Rs12500 as against Rs4500 to Rs5000 last year. In 1996, an average retail gur price was 14 rupees. Currently, it is Rs60-80 for different varieties.

Farmer can hardly be expected to take their yield to mills when they can earn double the amount by opting for gur. Sardar Ali, a farmer says an acre of sugarcane yields 600 maunds of sugarcane, “The farmer gets a maximum of Rs100,000 if he takes it to a sugar mill. But his net income will be around 50-55 thousand rupees after deduction of all of his expenditures. Conversely, it can produce 40 purs. With the current rate, these purs can fetch him over Rs200,000 and his net income may be over Rs100,000.”

The government has failed to implement the decision of the Supreme Court (SC) to provide sugar at Rs40 a kilo to domestic consumers. In a move that revealed its helplessness vis-à-vis the powerful sugar barons, the government raised its price to Rs45 per kg from Rs38. It also failed to stem steep rise in its prices in the open market. Sugar prices have surged to Rs70 a kilo.

According to reports, the government is mulling a crackdown against sugar mills for selling the commodity at higher price. However, it may be reminded that when the government launched a crackdown on sugar mills last year, following the SC directive to ensure availability of sugar, the commodity disappeared from the market and its price almost doubled in a matter of days.

Pakistanis consume 26kg of sugar per person annually. According to the Ministry of Industries and Production figures, around 170 million require about 4.4 million tonnes against the expected production of 3.1 million tonnes this year. If we reduce sugar consumption by one kg per person in a year, it can save 200,000 tonnes of sugar and Rs650 million with the current international price of the commodity. The government should encourage sugar-beet. The Competition Commission should also investigate and pursue allegations of cartels in sugar industry.

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