No crushing until government provides working capital: PSMA

ISLAMABAD, Pakistan Sugar Mills Association (PSMA) has refused to start crushing until the government provides working capital and guarantees free-market mechanism. This was the crux of a meeting of Sugar Advisory Board (SAB) held here on Monday under the chairmanship of Minister for Industries and Production, Mian Manzoor Ahmad Wattoo. "Sugar mill owners will not start crushing until the government extends working capital to the mills that are in default and assure a free market mechanism as recommended by the Competition Commission of Pakistan (CCP)," sources close to the minister told. Sources said the representative of the State Bank of Pakistan (SBP) assured the meeting that they can only extend working capital when the government gives a green signal. The meeting was reportedly informed that most of the sugar mills have defaulted on payment to the SBP because they were unable to sell their sugar in the market due to the crackdown. Sources said the issue of Cane Procurement Receipts (CPR) could not be resolved, as the SBP did not agree to accept CPR as cheques to growers. When contacted, PSMA Chairman Iskandar Khan confirmed to this scribe that the association has conveyed to the government that it will not start crushing by November 15, 2009 if their demands are not accepted. "We cannot allow anybody to force us to sell sugar below production cost," the sources quoted, Iskandar Khan as saying in the meeting. The government, has, however, agreed to link sugarcane price with the sucrose contents, which was one of the major demands of the millers for long. There are apprehensions that crushing will be delayed because of Eid which is likely to fall on November 29. Sources said PSMA also opposed establishment of new mills with the arguments that when there is no increase in sugarcane cultivation area there is no justification for new mills. "Presently, all the mills are running on 60 percent production capacity, first arrangement should be made to provide sugarcane so that they operate on full capacity," the sources quoted Iskandar Khan as saying. Sources said in the previous meeting of the SAB on July 21, it had been decided that Secretaries of the Ministries of Industries, Commerce and Food will decide the timing and necessity of import of the remaining 0.075 million tons and additional 0.1 million tons of white sugar prior to the commencement of the new crushing season. It had also been decided that sugar cess fund, which is being used for the construction of roads be used to construct 'Kunda' (scales/weigh bridges) and sucrose testing stations at the Union Council level. All private 'Kundas' that were carrying on illegal operations would be permanently dismantled. Another decision taken by the Board was with respect to the Gur ban issue, which was complicated due to Gur being sent across the border. However, trucks would not be allowed to transport it for family use. The Frontier Constabulary (FC) would be responsible for checking smuggling of sugar under the garb of Gur. The sources said the SAB, in its hurriedly-called meeting, also discussed a report by the Punjab Agriculture Research Institute on site/area specific sugarcane varieties of high yield/insect resistance characteristics and their propagation amongst the growers in the country, besides a report to the Board by the Minfa Sugarcane Commissioner on a mechanism to use sucrose content to pay sugarcane growers.