The (continued) sugar crisis

The revised target of wheat production The (continued) sugar crisis Tapal holds strong market position SBP Annual Report

Price controversy between growers and millers taking an ugly shape

By AMANULLAH BASHAR
Nov 13 - 19, 2000

The price controversy between sugarcane growers and the millers is taking an ugly shape, which may result, into closure of the recently started crushing operation in the province of Sindh.

Around 20 mills, which started crushing against their will on the directives of government of Sindh from November 1, were already running merely on 10-15 per cent of their capacity due to short supply. The growers are demanding Rs60 per 40 kg of sugarcane against the official price of Rs36 per 40 kg fixed by the government. It is reported that despite an enhanced price of Rs45 per kg by the millers, the growers are insisting on their demand for Rs60 per 40 kg, which is stated to be beyond the economics of the mills.

The sugar mills, which started crushing under Sindh government advice from November 1, 2000 in Sindh, were already running on 10-15 per cent of their capacity due to short supply of cane. In effect, the millers had suggested to go into crushing from after mid of November or early December to get better recovery out of the available crop. They were forced to start crushing by the government quarters.

Driven by the feudal leaders agitating and demanding sugarcane price at Rs 60 per 40 kg also influenced harvest of cane badly. The demand envisages as much as 67 per cent higher prices than fixed by the government at Rs36 per 40 kg. If the sugar industry succumbed to the demand it will increase cost of production by at least 41 per cent i.e. Rs7 per kg of sugar and Rs7000 per ton. Currently sugar is being sold at Rs30-32 in retail. The acceptance of growers demand means that price may well exceed from Rs35 a kg in the retail market. According to informed sources, the benefit of the higher price may not go to the growers in the provinces of Sindh. In effect, the lion's share would go to the big feudals who have already purchased the cane from smaller growers at a price of their choice. This sort of politicization in the farms may damage the wonderful growth rate by the agriculture sector in Pakistan.

Except in the province of Sindh, there is not such an agitation or compulsion in other sugarcane growing zones of the country. Sugar economy in Sindh has become topsy turvey due to cost escalation emerging from high prices of sugarcane.

Consequently, costly imported furnace oil is being burnt which worked out an additional cost to Rs3000 to Rs5000 per day. Grinded by the high cost syndrome shaping from early start of crushing season and The Pakistan Sugar Mills Association has demanded of the Chief Executive and the Governor of Sindh to rescue it from the mounting pressures.

Production

Sugar production is estimated around 2.8 to 3 million tonnes this year. Experts in the field have estimated that around 1.7 million tonnes may be produced by Punjab, 0.9 million tonnes in Sindh and 0.2 million in NWFP. This means that sugar may not be required to be imported next year if things were allowed to move in a planned way.

Sugarcane production may be around 13 million tonnes in Sindh. Out of which 10.5 million tonnes of sugarcane may come for crushing enabling the mills to produce around 900,000 tonnes in Sindh this year.

Crop in Punjab is comparatively better in terms of yield which is estimated to around 30 million tonnes, out of which 3 million tonnes may reach for crushing. If better recovery is achieved Punjab may produce 1.6-1.7 million tonnes of sugar this year.

In NWFP if tendency of Gur making can be checked sugar production may be around 200,000 tonnes.

The drought and water scarcity has already affected the crop production in Sindh. Moreover an undue compulsion made by the government of Sindh added to the crop problems. It may be mentioned that Agriculture Department forced the farmers to start crushing from November 1, 2000 has given a big backlash to sugar industry, said a miller.

Water made available by the federal government to the province of Sindh for a short time has engaged the farmers recently in cultivation of rice and sugarcane to avail themselves of having wet lands.

Chances of constant water flow are scant due to shortage in the reservoir upstream i.e. Tarbela, Mangla etc. Likewise growers in Sindh are presently busy with wheat harvest and therefore sugarcane supply is not coming up to the mills.

Water

Approximately, 4.123 million-acre feet of water is annually lost through seepage from irrigation channels. This resulted in complete water logging of 12 million-acre land and partial of 18 million areas. The NWFP has demanded Rs227 million to work on 800 watercourses during 200-2001 and Sindh has prepared its case for 245 watercourses requiring Rs91.13 million. It is said that productivity in Sindh has been adversely affected due to water logging and salinity.

The outstanding performance by the agriculture sector has become the haul mark of the economic policies of the present government. In order to achieve the best of agriculture potentials, especial efforts are needed to improve water management in Pakistan. We cannot afford to lose precious water due to mismanagement or seepage from irrigation channels. A master plan is the prime need for a better management of available water in Pakistan.