The import of 0.2 million tons raw sugar was allowed by the government last week to arrest upward trend in the commodity prices in the open market.
Sugar prices had gone up to Rs 24 per kg with an average increase of Rs 5 per kg in the last week of December. This, as was expected, invited quick reaction from the government. The matter was thoroughly discussed in the recently held Economic Co-ordination Committee (ECC) meeting and resulted in permission for duty-free raw sugar import.
The official circles are convinced that the government's decision to allow duty-free import of raw sugar was a conscious step on two counts- the imported commodity would provide the local sugar industry additional raw material for refining and help the government ensure supply of commodity to the consumers at reasonable rates.
They rejected the Pakistan Sugar Mills Association (PSMA) criticism on the decision saying, "The PSMA was tricky on the issue to provide shelter to its members so that they could keep on getting undue profit and mint more and more money by increasing commodity rates."
They added that the PSMA did not honour agreement reached with the government sometimes back which brought in the Trading Corporation of Pakistan (TCP) to pick-up around 0.5 million tons commodity to enable them pay dues to the growers.
The government honoured its commitment of making full payment of bought commodity but the mill owners defied it by not paying dues to the growers.
The policy makers have strong feelings that the mill owners' chronic attitude of not paying dues discouraged the growers who switched from sugarcane crop to other beneficial ones and this phenomenon resulted in less area of sugarcane plantation and so the production for 2004-05.
The authorities also believed that had the mill owners paid dues to the growers the latter would have planted more sugarcane and thus have gotten maximum crop for crushing.
It may be noted that the government despite its best efforts could not ensure payments to the growers and a number of influential mill-owners are yet to pay dues to the growers of their pervious crops.
The government has also taken the issue of buying of sugarcane by some mills through the middlemen at much cheaper rates and directed to the provincial Cane Commissioners to take all possible steps to curb this unhealthy practice and ensure fixed price of the produce to the growers.
The sources said that the government has confirmed reports that the mill owners were using middlemen as their tool to get sugarcane from the growers at the rate of Rs 27 and Rs 32 a maund in Punjab and Sindh respectively, against fixed price of Rs 40 and 43.