News Column

Sugar sector facing severe financial crunch

May 17, 2014



The Pakistan Sugar Mills Association has said that sugar industry is facing severe financial crunch owing to non-disposal of surplus stocks mainly due to insignificant export of the commodity and partially because of stable rates for the last couple of years despite the fact that rates of every other commodity, including oil products and transportation cost, have risen sharply.

“We have been asking the government to allow export of surplus quantity for timely payment of dues to growers.

The prices being quoted to sell sugar to TCP for its sale at the USC outlets were the lowest minimum prices under financial constraints to clear payments to sugarcane growers,” observed a spokesman of the PSMA. He claimed that over 90% of sugar mills are not in a position to break-even at prices quoted to TCP and do not even recover the cost of sugarcane. He further elaborated that if industry was capable of manipulating price, why would it seek help of the government to provide them rebate for export. He stated that prices are always demand and supply driven.

Condemning the statement of Utility Stores MD Khaqan Murtaza, he said that MD does not understand the dynamics of sugar industry. As a matter of fact sugar industry has been having surplus production for the last 4 years and it has not been able to control or manipulate the price in the local market which by itself vindicates the industry against charges of cartelization.

As far as tenders to Trading Corporation of Pakistan are concerned no en-block price has been quoted for the last several years because every mill has its own financial discipline which enables them to quote a price based on their circumstances. Therefore, alleging that the industry has not given rate below Rs.47 is also miss-stated because one of our member mills quoted a rate of Rs.45/- also during this period of time, pointed out.

He said that Khaqan Murtaza should apologize for making such irresponsible statement which has no ground reality and is based on mere conjectures, failing which PSMA reserves the right to claim damages for maligning and damaging its repute.

He alleged that the USC, instead of providing sugar to poor strata of society, sells sugar in open market and involve in several scams.


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Nation (Pakistan)