Despite having a strong
production base, Pakistan has to import sugar
By AMANULLAH BASHAR
Jun 12 - 18, 2000
Pakistan may have to import at least 400,000 tonnes of sugar this year
due to shortfall in production during last crushing season. This shortfall, however, was
not unexpected, as the professionals, engaged in this business, had already predicted
about the setback.
To describe the shortfall as setback seems to be an appropriate word
specially when a country, having a strong agriculture and industrial base for sugar
production, reverts to the position of an importer after remaining in the exports for
quite sometimes. The sugar industry exported 500,000 tonnes each year. The total
production of sugar during last season was estimated at 2.400 million tonnes against the
requirement of 28-29 lakh tonnes.
It is unfortunate that the economic planners did not pay heed to the
forecast by the sugar experts about the shortfall they had declared some 6-month back. The
sugar price at that time was $180-$190 a tonne in the international market which has now
shot up to the current price level of $260 a tonne. Everybody knows that one-year forward
trading is in vogue all over the world. Had we entered the forward trading 6-month earlier
for import of 300,000 tonnes we would pay only $57 million instead of $78m as a result of
rise in the international prices.
This means that if Pakistan goes for import of 300,000 tonnes of sugar
to meet its requirement and it has to go, the economy has to bear the burden of an
additional cost of $21 million or Rs1.13 billion due to price escalation.
At present, the sugar industry has an inventory stock of around 619,000
tonnes of sugar which is hardly enough for 3 months i.e. June-August, as we consume around
220,000 tonnes per month. September-October is the lean period for which we have to import
The crushing season starts from mid-October in Sindh and from middle of
November in Punjab every year. This means that the country would have to depend on
imported sugar at least for three months consumption.
Replying to a question regarding start of the crushing activity at
least one month earlier with a view to save the precious foreign exchange, the experts
observed that going before schedule would amount to a huge loss of recovery of sugar out
of the cane crop. Immature crop contains a very little of sugar in canes. For example, the
current age of the crop would produce hardly one per cent of the sugar. The recovery level
would increase to 7-8 per cent in October and November. The crop could yield even up to 11
per cent if the crushing would start in January. Hence early crushing in no way is
commercially feasible. Even the Oct-November crushing cannot be described as an ideal
situation as the crop usually gets fully matured in December-January.
Spelling out the factors leading to current shortfall in sugar
production, the experts said that beside other factors, introduction of an Indian variety
of sugarcane commonly known as "DISCO" was one of the major factor for
production. This variety of cane comparatively carries much less amount of sugar contents
as compared to local varieties. However it is heavier in terms of weight which attracts
the interest of the grower. A ban was put on that variety sometimes back but was lifted
later for unknown reasons. Other factors for less production include reduction in the area
under cultivation for cane crop, unfavourable weather conditions, less rains and of course
the cyclone factor which had hit the cane growing belt in Badin and Thatta areas last
year. At least 30 per cent crop was damaged by that sea storm.
All said and done the fact remains that the consumers already under
severe price hike pressure are forced to buy sugar at Rs23-24 per kg mainly due to
mismanagement on the part of the people at the helm of affairs. There is a general
practice of maintaining a buffer stock of sugar by every sugar producing country. In
India, the government releases sugar out of the buffer stocks to maintain the price level
in the market whenever it is needed.
Despite having a strong production base of sugar industry with 75 units
and installed production capacity of 4.867 million tonnes, the industry has always been
suffered of 50 per cent capacity utilization less than the installed capacity. The sugar
industry despite having all potentials to support country's export base never gained the
status of a cash crop. The current situation is rather hopeless as the country instead of
having any gains out of the strong industrial base, is compelled to import sugar at a much
higher price to meet its requirement. This is only because of lack of coordination between
the economic planners and the industry. Situation demands that a comprehensive sugar
policy be evolved supporting the industry to produce sugar both for the domestic needs as
well as for exports.