The coming events have started casting their shadows
on the sugar industry. So far the industry facing the problem of surplus
and appealing the government to lift the excessive inventory to enable
the millers to keep moving the wheel especially in Sindh.
The remaining part of the current financial, however,
seems to have both negative and positive developments in store for the
sugar industry in Pakistan on account of changing scenario at home and
On the domestic front, the industry may confront a
shortfall in cane supplies estimated to the tune of 25 percent owing to
reduction of under cultivation land for the sugarcane crop this year.
The area under cultivation was reduced in view of acute shortage of
water in the province of Sindh. The overall assessment of the crop last
year was around 50.3 million tons, which is certainly to go down in the
The start of the crushing season in Sindh is another
issue confronted to the industry in the province of Sindh, as the
provincial government has given a deadline of October 1, 2004 to start
crushing of the season. However, the millers are reluctant to comply
with the government advice to start crushing the given deadline as they
feel that the crop was not fully matured to yield a better recovery.
They have expressed their concerns that going for early crushing means
to face yet another loss of low yield due to premature crop.
In a way, a tension like situation continues to mount
in the industry as the stalwarts of the sugar industry in Sindh are
frequently meeting to discuss the situation and to find a way out to the
The shortfall in supplies is bound to affect the
volume of production in Sindh. The pinch of the shortfall may not be
felt in near future as about 200,000 tons of surplus sugar earlier
lifted by the Trading Corporation of Pakistan may bridge the gap.
In view of the fast approaching month of Holy month
of Ramazan, the government has already taken precautionary measures to
maintain sugar prices by taking the steps of releasing the stock of
sugars in the market. Consequently, the rising trend of sugar prices has
been effectively checked. At the retail stage, the sugar is being sold
at Rs20kg while at wholesale stage it is available at Rs985/- per 50 kg.
Despite all preventive measures the prices of
essential commodities like sugar are generally increased in Ramazan as
the profiteers managed to engineer a situation for taking optimum
advantage of the situation every year.
The sugar industry in Pakistan was unable to compete
in the export market due to higher cost of production, which they say
renders the industry uncompetitive in the export regime. Although the
industry has always been keen to enter into the world market and
pressurizing the government for a subsidy for developing a matching
price mechanism the government never acceded to which they alleged.
However, under the changing scenario, when the
developed economies especially in the European Union have agreed to
withdraw subsidy they were offering to agriculture in general and
sugarcane crop in particular, there is a possibility that the withdrawal
of the subsidy by the developed economy will pave the way for the sugar
industry in Pakistan to share the export market in near future.
The current situation was discussed with Arif Habib,
the Chairman Karachi Stock Exchange, especially in respect of price
stability in the shares of the listed sugar companies, he agreed that
certainly with the increased profitability and activity, the share price
of the sugar sector will move towards stability, but on the other hand
the consumers would have to suffer because of increasing prices due to
Since the use of ethanol (industrial alcohal) as an
alternative fuel especially for the transportation sector in a major
part of the world, there is yet another significant activity of the
sugar industry to establish ethanol producing plants to optimize their
Currently there are 11 operative plants producing
ethanol, which is a value addition to the molasses so far a by-product
of the sugar industry. According to an estimate, currently some 30
million tons of molasses was being converted into the ethanol. There are
strong possibilities the production of molasses may take a quantum jump
in the years to come as more ethanol plants are being established
besides expansion in the existing facilities, the experts say.
Pakistan has a strong industrial base in the sugar
sector which has the potential not only to meet the entire sugar
requirement of the country but can produce export surplus as well
provided supplies of raw material were ensured. Sugar cane crop as every
body knows that like rice it is also a water-consuming crop. The
industry may face a serious irritants in the face of water constraints
which consequently might affect the supplies more adversely in future
unless sufficient arrangement were made for supply of water for
irrigation purposes. One of the options is to construct big dams to meet
the growing demand of water. However, the economy was confronted with
current and cross current developments having economic as well as
political attachments serving certain quarters of different school of
thoughts in this country.