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The sugar crisis continues

Sugar industry sailing through troubled waters

Jan 15 - 21, 2001

The sugar industry has asked the government to take immediate corrective measures to save the industry currently passing through difficult times.

People were expecting that following the agreement signed between the mills and the growers for the purchase of sugarcane, at an agreeable price of Rs50 per maund would settle down the issue. It is unfortunate that the crisis in the sugar industry has not yet been resolved.

Though the dispute between growers and the mills of Sindh was resolved to some extent after both the parties were agreed on the sugarcane price at Rs50 per maund. Yet the issue of sugarcane price continues to affect the conditions in the Province of Punjab as the growers in that province are insisting at a price of Rs60 per maund instead of Rs50 agreed in Sindh.

While the sugar industry was perturbed due to increase in sugarcane price and increase in Sales Tax which has been enhanced from 3.50 per cent to 4 per cent. Consequently, the increase in sugarcane price and sales tax altogether have enhanced the cost of production while the import of Indian sugar at dumping prices are posing a serious threat to the survival of the local industry.

They slated that beside import of 500,000 tonnes of raw sugar, the government has allowed import of 200,000 tonnes of refined Indian sugar without ascertaining the exact size of the local production during the current season. According to an estimate, total stock of the sugar would be around 32-33 lakh tonnes against the consumption of 31 lakh tonnes of sugar leaving 1.5 million tonnes in surplus. Had the government waited till the assessment of the exact size of production the economy would not suffer out flow of foreign exchange on account of import of Indian sugar.

It is however unfortunate due to this mismanagement in sugar industry the sufferers would be consumers who have to buy the essential item at a much higher rate. It may be recalled that before start of the crisis, sugar was being sold at a price of Rs18 per kg which shot up to the level of Rs30 per kg before the month of Ramazan. Although the current prices at retail stage is Rs24-25 per kg it is still much higher when compared with the price of Rs12-13 being sold in neighbouring India? In the best interest of the people, the economic managers in Pakistan specially those looking after the agriculture sector would have to evolve a policy to keep price in line with the buying power of the people at the grass root level.

They are duty bound to keep an eye over the elements politicizing the agriculture sector to extort or the profiteers who are the masters to create crisis like situation to achieve their nefarious designs.

To avoid recurrence of such crisis, the government of Sindh had assured to take appropriate action against the middlemen in the sugarcane marketing and growers will ensure direct supply of sugarcane to the sugar mills.

The local industry has strongly urged the government that in order to enable it to meet the threat from imported sugar the duty on import should again be increased from 15 per cent to 40 per cent so that the local industry could be saved from crippling effects due to dumping prices offered by the Indian exporters. The local industry rightly expected of the government to provide level ground to the national sugar industry against dumping sugar imports taking place at present. The landed cost of the imported sugar from India, is around Rs22-23 per kg which is much cheaper when compared to the price of local sugar of Rs24. While the sugar industry has the concerns that under such a situation how it would survive on one hand, the consumers on the other hand have their own grievances. They generally feel how Indian sugar Industry managing to sell the sugar at Rs13-14 per kg to their consumers. Naturally they have the feelings that what is the sauce for the goose should also be the sauce for the ganders. The sugar industry also pleads that in order to restrict import of sugar from India it can be placed on the negative list. It is a matter of great concerns that despite having a strong industrial and agriculture base, the sugar industry is forced to operate below 70 per cent of its capacity mainly because of all these problems. The available capacity to produce an export surplus is difficult to be utilized. While the government is determined to tap all available resources, the potential of sugar industry is going waste. The situation offers the challenge to our economic managers for some brain storming to make out some ways to get benefits of available resources in sugar industry at the optimum level.


Responsibility lies on the shoulders of the economic managers to evolve a mechanism in such a manner that enables the local industry to survive while the price of this essential item remains within the reach of the consumers. One way to get out of this perplex situation is to sacrifice on the part of the government either in the shape of withdrawal of sales tax or to give subsidy to this sector as is being practiced in India, said some experts in the sugar industry.