950821

FIA raids unjustified

Sugar mills insist

prices should be

Rs 20 per kg

HASIB HAIDER

LAHORE: Sugar mills owners, suggesting that price of the commodity should be at least Rs 20 per kilogramme owing to the rise in utilities and support price of sugarcane, termed the FIA raids and sealing of mills as unjustified.

"It is not a political issue, but an economic one. As a result of government's last year's decision of raising the support price of sugarcane from Rs 18 to Rs 20.50 per maund, and with the subsequent price hike of various inputs, rise in utility tariffs, salaries and various government levels on pro rata basis the cost of production has gone to a level where the present price of sugar seems unrealistic," the Acting Chairman, Pakistan Sugar Mills Association, Mian Farooq Saigol, said while he was flanked by his other colleagues here on Monday evening.

He said that they could not sell the sugar at Rs 13 per kg as has been asked by the government to do. "The government-owned sugar units recently tendered out their commodity openly at Rs 16.02 per kg and if they sell their 40,000 metric tonnes at the official price then we would also follow it," Saigol said.

He denied that the mills have stopped the supply of sugar, "how can we do it when we want to get rid of our stocks before going to next season's crushing," he said.

His colleagues warned that if the present crisis, created through ill-visioned policies of the government continued, the next sugar season could create serious problems for the nation, and sugar price might escalate to Rs 25 per kg.

Mian Farooq said the FIA sealed 12 sugar mills, including Baba Farid Sugar, Ashraf Sugar Mills, Kohinoor Sugar Mills, Ramzam Sugar, Sheikhoo Sugar, Noon Sugar Mills, Fatima Sugar, Adam Sugar, Brothers Sugar, Hussain Sugar, Crescent Sugar, etc.

He said Pakistan Sugar Mills Association would go into litigation against govenrment's sealing of the sugar units.

Farooq also released a communique which is as follows:-

"The Pakistan Sugar Mills Association strongly condemns the action taken on the basis of mis-information against its member mills." Moreover, in view of the misleading reports published in the Press it feels it needs to provide the following clarifications:

"The Association resents the allegations of hoarding, smuggling and excise evasion against the sugar mills. These allegations are baseless and are intended to legalise the illegal trespass of the authorities in them ill premises".

Sugar Availability: Pakistan has produced a record the million tons of sugar in the 1994-95 crushing season (October - September). It had a buffer/opening stock of 0.309 million tons on October 01, 1994. This makes a total supply of 3.309 million tons. Out of this the government has permitted an export of 300,000 tons.

"Thus, total available domestic supply is 3.009 million tons against domestic consumption of only 2.6 million tons. Thus, domestic supply is surplus by over 409,000 tons.

Seasonal Industry: The sugar industry is a "seasonal" industry. Sugar is produced in six months but has to be sold over 12 months. Thus, all sugar mills are forced to carry sugar stock at a significant financial burden since it is not possible to market all the sugar produced in six months.

Duty-Free Imports: The Government of Pakistan has allowed duty-free import of sugar. It is Impossible to "artificially" fix prices in such a scenario. Free imports means that local sugar prices cannot be higher than the prevailing international prices otherwise sugar would be imported.

Sugar Stocks in Mills: The following table reveals that the sugar stocks as on 31-7-95 in mills in Punjab are in accordance with normal historical patterns and, in fact, lower, which clearly negates any possibility of "hoarding" by sugar mills:

Year Total Quantity in Quantity Percent

Production (M.T) Stock (M.T) Lifted (M.T) Lifted

1992-93 11,01,642.00 2,88,557.75 8,14,973.45 73.81%

1993-94 16,34,154.25 4,29,567.25 12,04,587.00 73.71%

1994-95 17,71,085.18 3,47,614.88 14,23,470.27 80.37%

Excise Department Control: The Government of Pakistan is always aware on a daily basis of both the quantity of sugar manufactured by a sugar mill and the quantity of sugar held in stock in a sugar mill as sugar is an excisable commodity and the Excise Department has an up-to-date account of sugar stocks varified by its own staff. Thus, again, the question of hoarding does not arise.

Moreover it is also clarified that the question of evasion of excise duty also does not rise as excise duty is leviable only. When sugar is released from mill godowns. It is not leviable on sugar held in mill godowns.

CONCLUSION

"In view of the above mentioned facts the Pakistan Sugar Mills Association requests the appropriate authorities to withdraw the unwarranted action taken against its member mills. Sealing of mill godowns may, in fact, have the negative impact of disrupting the supply of sugar in the market. Immediate de-sealing of mill godowns is, therefore, required to ensure that this does not occur.