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Sugar economy - an overviewSiraj-ul-Hasan

In Pakistan, till today no research institution has been established for the development of sugarcaneproduction and increase in the recovery rate of thecrushed cane. As a result, sugar recovery is hardly 8

percent as against 12-14 percent in other world sugarproducing countries.

Therefore, when the government has decided to revivethe sugarcane zones in the country, it is alsonecessary to provide other incentives as well,particularly to allow export of refined sugar, give taxholiday to decrease the cost of the product, set upsugarcane research centres and further facilitate creditavailability.

In Pakistan, the sugar industry is largely based onsugarcane production without a nominal percentage of sugar-beet. But in the world context, sugar-beet

contributes about 16 percent to the sugar production.

Now, for sometime past the industry has been under crisis mostly due to divergent views of thegovernment and the sugar mill owners on the actual volume of surplus lying un-cold with the mills.

Production of refined white sugar obtained from sugarcane is the largest segment of sweetening industryin Pakistan. The other traditional sweeteners are comprised of gur, shakkar and desi cheni. Thesetraditional sweeteners, are manufactured through the process of crushing cane to extract juice andtreating it in different ways, including heating.

Over the last three decades, these indigenous sweetners accounted for about 3/4th of total sweetenersupply. The production of these commodities began to fall thereafter and at present it is estimated at2/5th of the total sweetener supply.

Recently, a beginning was made to produce some sweeteners in powder and fluid forms. But they havenot yet made any impact on the total sweetener supply.

Sugarcane Production:Sugarcane production during the last 5 years has been as under:

Year Production1996-97 41,99811996-97 53,1041996-97 55,191

1999-2000 46,3332000-2001 43,606

Source: Ministry of Food & Agriculture G.O.P.

Sugar production in the country is characterised by relatively low yields when compared to internationalstandards. Sugarcane is moved to local mills to manufacture refined white sugar or is used in the farmsfor manufacturing gur and allied products.

At present there are over 69 sugar mills operating in the country, having a capacity of over 172,000tonnes crushing per day (TCD). No official figures about domestic consumption of sugar are available.

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However, on the basis of the past household surveys, conducted by FBS (Federal Bureau of Statistics)per capita monthly sugar consumption during 1994-95 is estimated at 1.05 kg or 16,40,000 tonnes or 30percent of the sugar production.

Bye-Products:These comprise molasses, bagasse and processed molasses which is the juice of what isleft over of crystalised sugar.It has a good market outside the country.

Domestically it is used as livestock feed, industrial alcohol and tobacco blending. Bagasse is the residueof cane after it is crushed for juice. It is utilised as paper and chip board raw material.

Price Spread:Of the consumer's rupee spent on sugar purchase about 40 percent goes to the farmer.The next largest share, being 24 percent, is pocketed by the government as excise taxes. The processors(sugar mills) receive 21 percent while the wholesalers and retailers get 9 percent and 6 percentrespectively.

These shares have been calculated by another report, entitled "Pakistan sugar industry - economic andpolicy analysis", prepared by Pakistan Economic Analysis Network (EAN), a project of the Ministry ofFood and Agriculture, GOP, published in the late sixties.

According to a survey recently conducted by the Federal Agricultural Marketing Department the price-

spread among various agencies concerned still remains more or less the same.

The authenticity of the above price-spread is considered above board when compared with other sugarproducing countries of the world. However, in Pakistan farmers share looks somewhat higher. As a matterof fact, as a policy measure, it has been kept high to ensure sugarcane production at a desired level sothat it may not fall short of the country's requirement.

Sugarcane production to a great extent depends on the support prices fixed by the government. Fixationand enforcement of these prices are considered necessary to make sugarcane cultivation competitivewith other competing crops like cotton.

The other factors affecting the cane production include cost and availability of various inputs like fertiliser,pesticide and irrigation water. The uncontrollable factors such as weather and change in technology also

influence the cane production.

Position During FY01:Sugar industry showed a very depressing situation in FY 01.

Its growth rate was deplorably lower at 14.8 percent as against 31.6 percent in the previous year. It wascaused mainly by a fall in the size of the sugarcane crop coupled with the delayed crushing operation.

The sugarcane production fell to 43,000 thousand tonnes in FY 01 from 46,333 thousand tonnes in FY00. In order to make up the shortfall, the government allowed raw sugar import.

As such around 0.5 million tonnes of imported raw sugar was processed by the local sugar mills enablingthe domestic sugar industry to recover the process round the year.

Although the sugar industry has taken some quick strides towards development over the years, it lacks inmany respects. The foremost is its inability to bring about an element of stability in the production of sugarwhich is so much an essential product.

Despite adopting various measures from time to time by the government to improve the situation, sugarproduction has not become stable. Even presently there are divergent views of the government and theindustry with regard to the estimated sugar production.

The main reason seems to be lack of its undivided attention on account of its preoccupation in other moreimportant matters, political, administrative etc. Therefore, there is a need to appoint an investigating

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committee to probe into the causes responsible for the ills of such an important industry as sugar andsuggest some effective measures to revolutionise and reactivate it.

This committee should be adequately representative of the experts of agriculture, marketing, pricing,industry and sugar technology. This committee should also examine the possibility to utilise sugar-beetfor sugar production to a large possible extent.

Sugar-beet has also a comparative advantage, as it is a low delta crop and occupies land for 4-5 monthsas against 10-14 months by sugarcane. Besides, sugar-beet cultivation in NWFP it may be economicallytaken up in the coastal belts of Sindh and parts of Punjab.