New sugar mills to spell disaster for industry: PSMA

Lahore: Pakistan Sugar Mills Association (PSMA) on Thursday demanded complete ban on setting up new sugar mills in country as current capacity is sufficient to cater for the needs of country for next forty years.

Establishing new sugar mills is counterproductive as 84 mills in different parts of country are already producing surplus while government has to spend billions for export of surplus sugar, said Chairman PSMA Iskander Khan.

He said that sugar mills are not operating according to capacity while new mills would push sugar industry to meet the fate of CNG industry where Rs 450 billion investments are under constant threat.

Talking to Dr. Murtaza Mughal, President of the Pakistan Economy Watch (PEW), Khan said that sugar mills are governed through obsolete laws framed in 1950 which is a reason behind continual sugar crises in Pakistan.

Lauding the decision of the government to provide subsidy worth Rs 10 per kg to the sugar mills, Iskander Khan termed it necessary to keep the troubled industry afloat. However, he opined that providing subsidy to growers in place of millers would be a better option.

Chairman PSMA said that sugarcane is costliest in Pakistan as compare to any other country while uniform price of the crop irrespective of the quality have left growers with no incentive to opt for better quality, therefore price of sugarcane should be linked to the quality.

He said that India is providing interest-free loans of Rs 660 billion to cane millers since three years so that farmers could be paid in time. Pakistan can experience to make receipts issued to planters by the cane millers cashable at banks to settle the complaints of delayed payments.

Otherwise, he said, mills would never be able to pay farmers in time as sale of sugar take one year and government generally delay buying surplus stock interrupting payments.

At the occasion, Dr. Murtaza Mughal said that unabated import of sugar will hurt millers as well as the growers. Imports will result in a fall in prices pushing many growers away from sugarcane, he added.

The government should take stakeholders on board and support sugar mills to generate power estimated up to 2,500 megawatts, he said.