Sugar prices may witness hike, millers say

LAHORE: The Pakistan Sugar Mills Association (PSMA) has indicated the possibility of a further increase in sugar prices with millers citing ineffective action against the role of middle men.

In this regard, a spokesman of the association’s Punjab Zone informed Profit that middlemen were making raw materials more expensive.

“Sugarcane farmers are paid by mills fifteen days after purchase while middlemen take advantage of this opportunity by paying them immediately. The price has been fixed at Rs250 per 40kg but middlemen do not make a purchase according to the rate fixed by the government and reduces it from Rs50 to 60 per 40kg instead. After stocking a large quantity, they sell it to millers at their preferred rates,” he said.

“Some mills make quick payments to farmers but not all follow suit which is why the middleman element remains in the process,” he added.

When asked why millers do not point out and complain about these middlemen, he replied that it is the government’s job to do so.

“First of all, they [middlemen] do not come directly to us, and secondly we also need raw materials to run mills. Sometimes, despite the high rates, we are forced to buy from them.  Millers want to buy directly from the farmer but our system is so weak that we eventually have to buy raw materials from middlemen so that mills do not close,” he added.

He said that the Punjab government has repeatedly been reminded to take effective action against them but in vain while the price of sugarcane continues to rise. “The price has currently exceeded Rs300 per 40kg. The price of sugar keeps going up because 80 per cent of the cost of production is dependent on the price of sugarcane,” he said.

According to the spokesman, effective action was taken only in Bhakkar district of Punjab; however, other districts matters were limited to formal proceedings and negotiations.

He said that the secretary Industries, and federal government had issued strict instructions to provincial governments for eliminating the role of middlemen but these instructions have not been followed.

“The current situation is that sugar mills are not getting the required quantity of sugarcane which is affecting the crushing process. If middlemen are not controlled, it will be difficult to control the price of sugar due to rising production costs,” he concluded.