Pakistan may import sugar in fy 2000

Special Correspondent, Islamabad
Feb 21 - 27, 2000

Pakistan may have to import sugar during the year 2000 in order to meet its domestic requirement which comes to 3.2 million tons whereas the expected yield is estimated at only 3 million tons due to an expected 20 per cent fall in sugarcane supply.

The Agriculture Price Commission (APC) in its report to the Federal Government has disclosed that due to short production by 20 percent this year, country is expected to yield only 3 million tons of sugar against local demand of 3.2 million tons. The APC was asked by the federal government to give its comments on sugar export issue to be submitted before the Economic Coordination Committee (ECC) of the Federal Cabinet which is set to take a decision to the effect in its meeting scheduled to be held next week.

The Federal Ministry of Food, Agriculture and Livestock, earlier submitted a summary to the ECC to get permission for sugar export of 50,000 metric tons to keep Pakistan in the international market as a seller and help the mill owners to clear all the dues of farmers on time. The Ministry had also sought Rs4500 per ton subsidy on sugar export to the exporters as well.

The All Pakistan Sugar Mills Association is also pressing the government not only for permission to export sugar export but also to give significant subsidy on sugar exports. However, these sources said, the finance minister Shoukat Aziz deferred the matter till the arrival of a report by a committee constituted for the purpose to advise the government on this issue. Sources said the government at that time had also sought comments from the Commission so that the decision could be taken in the light of an expert opinion from the professional institution. "The copy of MINFAL summary for the sugar export was also sent to the Commission for parawise comments," sources said.

Sources said the Commission in its comments on sugar export issue, pointed out that sugar industry at present can produce about 5 million tons of sugar with the annual crushing season of 150 days provided sufficient supply of sugarcane is available. It further said that annual production of sugar during last two years has averaged at 3.5 million tons. However, it adds, in the current season given short supply of sugarcane, sugar production is expected to be around 3 million tons.

Sources quoted the Commission as saying that at the average annual per capita consumption of about 22 kg, current domestic requirement is estimated to be more than 3 million tons. The Agriculture Price Commission has also pointed out that the ratio of raw material cost of sugar may have increased to 58 per cent in view of increase in price of sugarcane. "If excise duty is to be excluded from the cost calculation, the ratio between raw material and processing costs works out at 66.34", the Commission said.

It adds that position relating to practice of delayed payment reported in the subject summary is by and large true. To exploit the situation resulting from the delayed payment, it adds, the middleman has also emerged in the marketing of sugarcane with the connivance of sugar mills. "To check the delay in payments, the law needs to be strictly enforced. The appointment of independent cane commissioner in Punjab can help in addressing the grievance of the farmers and the problems of the sugarcane industry", the Commission recommended to the government.

The commission said that continuous uncertainty about the pricing situation is resulting in cob-web cycle like situation in sugarcane farming. "The yearly fluctuation in area and production during the last 10 years established the fact that this policy is putting negative effect on cane farming in the country," the Commission report states.

It has further pointed out in its report that notwithstanding, the needs to reduce layers of the middle man and control the big guns to discourage the cartel like situation in sugar trade, the middle man be eliminated from the marketing system.

Finally, the Commission said the efficiency both of sugar production and its processing into sugar by the mills is comparatively much lower in Pakistan. " There is a considerable scope for the improvement on these fronts to lower costs of sugar for the consumers", the report of Agriculture Price Commission states.