PSMA expressed concern upon statements made in parliament

Published on – June 29, 2020 – 12:11 am

ISLAMABAD: A spokesperson of Pakistan Sugar Mills Association (PSMA) has expressed concern about certain statements made against the sugar industry in Parliament yesterday, which appeared to be based on incomplete, skewed and erroneous data.

The PSMA spokesperson drew the attention to following correct facts which were obviously overlooked while making the aforementioned incorrect statements:-

  1. Neither PSMA nor the mills fix/determine the price of sugar, as there is free market mechanism in place. Price of sugar is determined by market forces based on supply and demand, which is the norm for almost all commodities sectors.
  2. On the other hand, the minimum support price of sugarcane (which accounts for approximately 80% of the cost of production) and taxes are fixed by the Provincial Government(s) and Federal Government respectively. The Spokesperson reiterated that sales tax on sugar in Pakistan is one of the highest in the world.
  3. The sugar industry is one of the major tax payers of Pakistan and contributes Rs. 50-60 Billion annually in sales Tax and Rs. 10 Billion in Income Tax annually.
  4. All subsidies were duly received by the sugar mills in compliance with applicable Government policies and applicable laws and no negative inference can be made in this respect.
  5. Accusations of exploitation of farmers by mills are baseless and not substantiated by the record. The mills annually inject Rs 350 Billion plus into the rural economy in shape of sugarcane payments to the farmers, that plays a positive role in the livelihood of the farmers.
  6. Manufacturing of sugar is one of the most highly regulated and monitored businesses in Pakistan, starting from purchase of sugar cane all the way to sale of sugar. There is no possibility of any off-the-books sugar production or double-accounting and that too on the scale being suggested.
  7. As far as export of sugar to Afghanistan and Central Asian Republics is concerned it was monitored & verified at multiple levels of different Government Institutions and Agencies. It is preposterous to now cast doubt on the authenticity of these exports.
  8. Government Institutions like FBR, SECP, CCP, Cane Commissioners etc. are highly respected with professional and competent staff. To suggest that their employees are on the payroll of sugar mills is highly disrespectful to both these institutions and the sugar mills.
  9. Sugar mills in Pakistan have invested billions of rupees in modernization of equipment and development of cane to produce some of the highest quality sugar which is exported throughout the world without any complaints or quality issues.
  10. High production cost of sugar is primarily due to artificially high support price of sugar cane fixed by the Provincial Governments. Production costs increase even more when price of sugar cane rises above the support price on account of increased competition between sugar mills, as happened in 2019-20.

The PSMA spokesperson also drew attention to the following contributions made by the sugar sector:

  1. The Sugar industry is the oldest and largest industrial and Agrarian industry of Pakistan, which uses less than 5% of cultivated land but has played a major role in the industrialization of Pakistan since independence.
  2. Today, it has allowed the country to become self-sufficient in sugar which would otherwise be a USD 2.0 Billion import. It has allowed for the indigenous manufacturing of sugar mill equipment which is today exported from Pakistan globally.
  3. The sugar industry has allowed for the development of a free market ethanol industry which exports USD 300 Million of Ethanol and competes with global leaders like Brazil.
  4. The sugar industry played a positive role to overcome the problem of load shedding. From 2008 onwards, Captive Power plants of sugar mills supplied significant quantum of electricity at the DISCO level throughout Pakistan. Sugar sector has also set-up 6 renewable IPPs which provide 150 MW of electricity to the national grid. The energy is produced from sustainable/renewable energy source without any imported fuel.

Sugar mills of Pakistan are committed to provide quality sugar at low prices to their consumers but at the same time must defend their right to be able to earn a reasonable return. PSMA reiterated its belief in and support for fair business practices and maintained its principled stance against malpractices like cartelisation and “satta”.

The media trial of the sugar industry and its members, that too by the highest echelons of the Government, is highly regrettable. In this manner, sugar mills are being denied due process and fair trial, which is their constitutional right. The damage to their business and goodwill and loss of reputation of many reputable leading business houses that are in the sugar industry is also unacceptable. The need of the hour is for the government to play a non-partisan, fair and balanced role in regulating the sugar sector and ensuring that it remains viable and sustainable for all stakeholders.-PR