INDUSTRY

 
1- SUGAR INDUSTRY FACING TROUBLE
2-
TEXTILE IN WTO REGIME
 

SUGAR INDUSTRY FACING TROUBLE

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Long-term policy urgently required to meet prevailing situation

 

By ASHRAF KHAN
Mar 21 - 27, 2005
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After the domestic sugar output dropped this season because of the water shortage to 47.3 million tonnes compared with 52 million tonnes last year, importers have booked around 270,000 tonnes of raw and 110,000 tonnes of refined sugar by February.

The government has scrapped the 25 percent import duty in an attempt to check the runaway domestic prices, which hovered at Rs25-26 per kg, though down from a four-year high of Rs30 in the first week of February.

Pakistan's domestic sugar production is feared to slip to 3.1-3.2 million tonnes in the current season (November-March) compared with 4 million, the previous year. The country's annual sugar consumption is about 3.6 million tonnes.

Another ship carrying 41,500 tonnes of raw sugar has arrived in March, however, the ruthless import has failed to cut rising sugar prices for consumers despite the government intervention. The Economic Coordination Committee of the cabinet late last month advised the state-owned chain of utility stories to sell sugar at Rs28 per kg from their retail outlets.

The Pakistan Sugar Mills Association has asked the government to cap the duty-free unlimited import of sugar till they release their final production figures by end March.

A long-term National Sugar Policy is an urgent need to redress long prevailing hindrances, the sugar industries as well as the sugarcane growers are faced with, industry experts say. Absence of visionaries in policy making corridors besides the frequent wrong assessment of crops has put the sugar industry into a mess lately.

Similarly, the de-zoning of sugarcane growing areas has also discouraged the growers and leading to a reduction in quality of sugarcane in the country.

The consumer protection organizations are also pointing out the consumer was paying high price despite all the steps taken by the government regarding the duty free import of sugar. A connivance of both the policy makers and the sugar industry has put the consumers into a trouble, which are paying more than the production cost of sugar.

THE INDUSTRY'S DILEMMA

Pakistan's sugar industry has been facing trouble since 2000-01, when the government decided to import sugar from India on the plea that the local production would not be meeting the consumption demand. The Ministry of Food, Agriculture and Livestock (MINFAL) came up with the calculation that the total production would be 2.4 million tonnes against the consumption estimates of 3 million tonnes. Despite the fact the then representatives of Pakistan Sugar Mills Association challenged the production figures at that time but the government turned down their arguments and decided to import sugar from India on the basis of MINFAL assessment.

Heavy imports from India resulted into surplus stocks of sugar in the country and the government had no way out but to purchase them from the sugar industry, soon after they threatened to delay the crushing in the subsequent season.

However, there is another account against millers. According to reports sugar mills in Punjab and Sindh were using tricky method of buying sugarcane through the middleman.

Sources said that Mill owners' claims of low crop are only because of illegal buying of sugarcane. Mill-owners' claims of paying the growers over and above the fixed price are not incorrect There was a glut after the TCP procured hefty stocks from the sugar industry last year. But this discouraged the growers who avoided growing enough sugarcane lest their last year experience might again create imbalance in local sugar market like previous year.

The experts are of the view that the policy makers have failed to come up with a long-term sugar policy in the country that has resulted into this messy situation. According to them, the absence of zoning system coupled with lingering water crisis in the country over the last few years has put the sugarcane growers into a miserable situation. Whenever the government comes up to bail them out by twisting the arms of industry, a big mismatch occurs and the consumers are supposed to pay the price for lack of coordination between the sugarcane growers, sugar industry and the government.

 

 

The unlimited duty free import of sugar is not a solution to the situation, as it would further multiply the problems during the days to come. The industry pointed out that the grower would prefer to cultivate more crops during upcoming year while keeping in mind the lucrative prices they got against their proceeds during ongoing crushing season. Since the government has put no ceiling on the import of duty free sugar, therefore, the commercial traders would not hesitate to dump sugar from the international market, which is swelling right now. The government would have to bear the hit ultimately next year if not this year that would bring the whole issue back to square one, they apprehended.

The market experts are of the view that the government should streamline the sugarcane growers, either through introducing the zoning system or by introducing the concept of cooperative sugar industry.

The millers, on the other hand, have made the point that the government should link the sugarcane price with the sugar price in the open market that would encourage mutual cooperation between the two sides.