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Pakistan sugar industry: a sweet-bitter saga

Pakistan’s sustainable economic growth begins with a strong agricultural base since it is an agrarian economy. The agriculture sector contributes around 21% to the Gross Domestic Product (GDP) and employing more than 40% of the labor force. It provides food to the rapidly growing population and fiber to the industry. Besides, the sector is also a source of foreign exchange earnings. Pakistan has been blessed with a very fertile land. Approximately 38 million acres of land is being used for agriculture and forestry; supported by an irrigation system with 40,000 miles of canals.

After the textile industry, the sugar industry is the only industry which can be called a model for agro-based industries. Sugarcane is a labor-intensive crop that requires about 134 man-days/hectare. Sugarcane cultivation provides a partial and seasonal employment to 3.9 million people approximately, which is about 12.14% of the total agricultural labor force.

Pakistan is the 6th largest sugarcane producer in the world. Like other cash crops, sugarcane is one of the most important cash crops of Pakistan and the main; it is a main contributor for sugar production besides paper and board industry. Pakistan is ranked number nine in the world for sugar production. On the other hand, it is the 8th largest sugar consuming country in the world. Currently, there is more than one million hectares of land used for sugarcane cultivation which produces more than five million tons of refined sugar annually.

There are about 90 sugar mills in the country, providing job opportunities to more or less 0.3 million people and contributing more than Rs20 billion to the government exchequer annually in the form of taxes. Though sugar industry in Pakistan has always remained under criticism mainly on the grounds of earning huge profits through cartelization. Though the socio-economic growth in the rural population of Sindh, Punjab and the Khyber Pakhtunkhwa is associated with the sugar industry. These sugar mills normally contact the farmers directly to understand their problems and facilitate them in solving the issues of availability of seeds, fertilizers and pesticides.

Over the years, domestic sugar consumption has grown from 0.5 million metric tons in 1975 to 5.1m metric tons in 2017 on the back of population growth. The per capita consumption of refined sugar in Pakistan was estimated at 25.65 kg in fiscal year 2017-18. As there is no major substitute for refined sugar available, its demand is brittle. The processed food sector, which includes candy, ice cream and soft drink manufactures accounts for almost 60% of total domestic sugar consumption.

Given that sugarcane prices are fixed by the government and sugar prices are determined by market forces, which is exhibiting a declining trend, the same may result in a cost-price mismatch, whereby change in retail sugar prices may not correspond with the change in raw material costs including other overheads as well.

Despite this, why the sector has been suffering from decline? For the last couple of years, the conflict between farmers and sugar millers over the issue of price is deepened. The farmers are insisting on higher price for sugarcane and the sugar mills are complains about ever increasing cost of production and also the import of sugar by the government; which affects the price of sugar in the open market.

The support prices for the sugarcane are fixed by the provincial governments from year to year and are usually different for Punjab and Sindh. Last year, the support prices were Rs180 for per 40 kg for Punjab and Khyber Pukhtunkhwa and Rs182 for per 40 kg for Sindh. Over the last 10 years, there has been an increase of 220% in the support prices of sugarcane whereas the sugar prices have increased by 100% during the same period. This gap of over 100% is affecting the sugar industry badly and some of the mills who did not sustain the loss are closed or at the verge of being closing down. Sugarcane is the main ingredient of sugar industry of Pakistan and hence the 80% of the total cost of production; along with overheads. High government taxes also contributes in enhancing the prices.

Pakistan Sugar Production
YearCultivated AreaYield (in Tons)Cane Crushing (in Tons)Sugar Production (in Tons)
2013 – 141,171,68767,427,97556,460,5245,587,568
2014 – 151,113,16162,794,82750,795,2185,139,566
2015 – 161,130,82065,450,70450,024,2495,082,110
2016 – 171,216,89475,450,62070,989,9467,005,678
2017 – 181,340,92683,289,34065,615,5506,576,534

The chairman, Pakistan Sugar Mills Association (PSMA), Aslam Faruque has remarked that the ex-mill sugar price was Rs47 per kg while the tax was being charged at the presumed price of Rs60 per kg. This mismatch between sugarcane and sugar prices was making it unfeasible to start the mills. Due to high ex-mill cost of sugar Pakistan cannot compete in the export market without support.

Pakistan Sugar Mills Association (PSMA) has been pushing for a uniform sugarcane price policy in line with the cost of sugar production or to link the sugarcane price with the quality of sugarcane. PSMA has argued consistently that linking price with the quality of cane would benefit both the mills and the farmer. This way the farmer who plant quality sugarcane varieties, have better yield and recovery would get more prices.

The current energy crisis and many other factors are not as favorable to improve the agro-based industrial sector for the time being. Conscious efforts are required to adopt the new farming technologies. The current cropping pattern and use of land for all major crops is required to be revisited.

According to Salim Rajpar, an agronomist, we should consider to cultivate more unconventional crops. He further said that there is a dire need to devise scientific methods and a rational approach to ease out the tension in the agro-industry and have a clear positive direction; for the benefit of common man.

 

Factors effecting the production of sugarcane

Agricultural factors:

  1. Improper selection of land
  2. Conventional planting methods
  3. Late planting
  4. Moisture stress at critical stages of crop growth
  5. Early and late harvesting
  6. Environmental resistance
  7. Low soil fertility
  8. Defective varieties
  9. Pests, disease and weeds

Policy factors:

  1. Lack of Research in Sugar Cane Technology
  2. Lack of Agricultural Education

Economical factors:

  1. Variation in Prices
  2. Unavailability of resources for the growers
Measures for the growth of industry

There is a dire need of international standard sugar cane breeding and research institute. It should be comprises of departments like physiology, agronomy, engineering, statistics with fully trained staff. The institute should have provincial sub-centers.

The crushing season should be reduced. For example it may be for 120 days from 15th November to 15th March. Variety performance should be evaluated for each month on the basis of sugar yield per unit area, and selection should be made for early, mid and late season crushing. Likewise cooperative societies created for development and marketing of sugarcane crop. This would help in solving many problems and would greatly help in increasing the sugar yield and would also eliminate middleman. The staff of the cooperative societies and their farmers should be given practical training in all aspects of crop production including land preparation, planting of seed or nursery raised plants from diseased free seeds. By doing this, the best crop production technology, use of balanced fertilizers with micronutrients and plant protection shall become a common practice.

The standard mill efficiency must be fixed first on the basis of which recovery of each truck would be fixed for payment. The cane price should be fixed as share in the sugar recovered on the base of standard efficiency. The sugar mills should provide warehouse facility to the farmers, free of cost or on nominal payment.

For quality payment special agreements have to be made by the mills farmers and the government. Facility for each evaluation of each supply of farmer or cooperative societies shall have to be provided. The farmers and millers shall have combined team for sampling storage and analysis. Whereas government shall have to provide technicians to solve any dispute occurring for sampling or analysis or evaluation for payment etc. The quality payment shall greatly improve our sugar yield and reduce the price of sugar.

Fixation of crop intensity shall provide incentive to all the farmers who can’t increase their area. They shall be forced to increase their yield to cope up with the target of their overall cane production. If the irrigation system is set right on a honest footing, the yield differences of small farmers and big influential farmers shall greatly come down and improve our sugar production.

The writer, Nazir Ahmed Shaikh, is a freelance columnist and is an educationist by profession. He could be reached at nazir_shaikh86@hotmail.com

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