Sugar millers have expressed frustration over the government policies that they felt are tilted to suit the interest of growers and consumers at their cost.
They warned that if the government failed to amend the said policy to accommodate the interests of millers the industry could actually collapse.
Each sugar mill having a double tandem (8,000 tons crushing capacity per day) will suffer Rs10 million loss per day if the government fails to correlate lower sugar prices with higher sugarcane support price fixed for new crushing season (2012-13)`, a miller insisted. Sugar industry leaders when contacted by Dawn on Saturday were perturbed over the developing scenario for the crushing season. They said the imbalance between higher sugarcane support price and lower sugar retail prices hovering at last year`s level were dangerous for the viability of the entire industry.
Similarly, a single tandem (4,000 tons or 100,000 maund crushing capacity per day) sugar mill will suffer Rs5m per day loss if the imbalancebetween sugarcane support price and sugar prices is not removed by the government, they added.
They questioned that as to how the millers would cover up Rs18 per 40 kg increase in cane support at Rs172 per 40kg, from the previous Rs154, when sugar prices had been static for the last one year. The cost impact would be around Rs5 per kg on white refined sugar.
In real terms the ex-mill cost of white refined sugar comes to around Rs57 per kg whereas retail prices have been hovering Rs52 to Rs55 per kg.
Giving calculations about the input cost per kilogram, they said, the 40kg cane which produces around four kilogram of white refined sugar costs Rs180 (including transportation) upon this is added Rs16 sales tax and Rs32 conversion cost (includes salaries, chemicals, mark-up etc). This will take the total to Rs228 but after dividing it into four per kilogram cost will come to around Rs57.
If the price of sugar in the open market is between Rs52 to Rs55 kg how could industry survive by selling the product at less than produc-tion cost? they asked.
`The sugar industry only operates (crushing season) for 100 days in a year but has to pay salaries for the whole year,` they asserted.
They said around 5.5 million tons were likely to be produced this season and after adding carryover stocks of 0.5 million tons, the country`s total available of refined sugar stocks would be of 6 million tons.
After meeting domestic demand of 4.5 million tons there would be a surplus of 1.5 million tons. The sugar industry will never get right price for their produce because sugar market will remain buyers market which will keep prices depressed, they added.
The industry leaders suggested that the government should allow sugar exports from the beginning of the season and also ask the Trading Corporation of Pakistan (TCP) to lift around 150,000 tons at ex-factory rate per month.
`This will stabilise sugar prices in the open market.
They however the idea that cane support price should be reduced and said that growers should be protected to encourage them keep producing more cane for years to come.