Sugar crisis: Who is to be blamed?
Unplanned actions both at the
time of exporting the surplus sugar or its import to meet the likely shortfall have also
contributed to the present crisis.
From Shamim Ahmed Rizvi, Islamabad
Feb 05 - 11, 2001
After cement now the Sugar Industry is facing a crisis. Is it not an
irony of fate that the country which had an exportable surplus of about 500,000 tonnes in
1998-99 has imported almost the same quantity in the form of raw and refined sugar during
the year 2000. Wrong policies and untimely decision, manipulated by vested interests to
import sugar have been mainly responsible for the present scenario. Unplanned actions
taken in a panicboth at the time of exporting the surplus sugar or its import to
meet the likely shortfall have also contributed to the present crisis.
Particularly in the current season (2000-2001) in action and
unpardonable lethargic attitude of the provincial authorities to intervene and resolve the
prolonged tussle between the sugarcane growers and the Sugar Industry is to be blamed for
the present situation.
The country had a bumper sugarcane crop in 1997-98 and 1998-99 and
domestic production of sugar exceeded each year 3.5 million tonnes. Earlier the year
1996-97 was a bad year and, fearing shortfall, the government, in a panic, allowed import
of about a million tonnes in 1996-97 against an actual shortfall of .3 million. In the
subsequent 2 years the production exceeded domestic consumption by over a million tonnes.
Surplus stocks became a problem for the government and the sugar industry leading to panic
exports against heavy rebates and subsidies costing state over Rs. 5 billion.
As a result of the panic sale and low prices during 99-2000 there had
been a drop of about 15 per cent in the cultivation of sugarcane area (1015) million in
99-2000 against 1155 million hector in 98-99. As a result the sugar production was
expected to be about 3 million tonnes in 1999-2000 as against about 3.5 million the year
before. There was a left over stocks of sugar of about 371000 tonnes. The domestic
consumption had never exceeded 3.1 million tonnes. As such the panic created about any
possible shortage of sugar during the year and consequent imports was a repetition of the
mistake the government made in 1996-97 during which over 1 million tonnes of sugar was
imported creating a glut in the market and the worst crisis for the sugar industry. The
sugar had to be exported at a price of about Rs. 13000 per tonnes as against production
cost of about Rs. 20,000 per tonne. The government had to subsidise these exports mainly
to India causing a staggering loss to the public exchequer.
The actual domestic production during 99-2000 touched 2.9 million
tonnes with a shortfall of about 2 lac tonnes. Despite appeal and protest of All Pakistan
Sugar Mills Association (PSMA) not to import more than 3 lac tonnes, the authorities
allowed import of raw and refined sugar of about 6 lac tonnes.
This year again the PSMA has asked the Commerce Ministry to immediately
ban the import of sugar because the estimated domestic production of 2.6 million tonnes
coupled with over 6 lac tonnes surplus of already imported stock will adequately meet the
domestic demand for the current year.
According to the PSMA, the domestic needs of the sugar were estimated
at 3.12 million while the domestic sugar production would be around 2.6 million tonnes. To
meet this gap, 300,000 tonnes of imported raw sugar is currently present in the country
while the stocks of about 386,000 tonnes of imported refined sugar would also be available
during the current fiscal year. Thus there would be around 3.286 million tonnes of sugar
available in the country this year against an estimated demand of 3.120.
It is, however, gratifying to note that the reversals in sugar
production in the last and current seasons has ultimately driven home to the government
the urgency of meaningful measures to identify the distortions in this sector and remove
them in order to revitalise the highly important agri-based sugar industry. The Commerce
Minister who had a series of meetings with representatives of sugar industry, sugarcane
growers, Ministry of Food & Agriculture, Commerce & Finance, told newsmen last
week that federal government is soon bringing out a new long term sugar policy to make the
sector market oriented and efficient.
A balanced and sustainable sugar policy which looks after the interests
of both the sugarcane farmers and the sugar mills owners, and which is reached upon
mutually and is acceptable to both is the need of the hour. For this, the price of
sugarcane should be determined in proportion to the quantity of sugar obtained from it.
Concrete measures should also be taken to boost the per acre sugarcane
production and proper research should be undertaken to look into the underlying factors
behind the falling production of the crop. Special zones adjacent to the mills should be
established for the supply of sugarcane to the mills. Sugar mills and the concerned
government institutions should make investment to replace old and non-productive sugarcane