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.