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Agri Overview

Increasing sugar production                                    Home
By Dr Sardar Riaz A. Khan

THE minister for food, agriculture and livestock has asked the sugar industry and farmers to optimize the cane and sugar productivity as the country has a capacity to
produce 5.5 million tons of sugar per year with 77 mills all across.

Pakistan, according to him, is producing enough to meet domestic requirements and at times it has also exported sugar surplus. This year, he said, the situation has
changed and the country is importing the commodity to bridge the gap between the supply and demand.

The information shared by the minister is not correct as the country is virtually importing sugar since its inception barring early 80s when self- sufficiency in sugar was
achieved which could not last long.

Since 1985-86, imports have been resumed despite an increase in the number of sugar mills from 41 to 77 during this period. According to official data, the domestic
production of refined sugar was 3.5 million tons in 1997-98 and 1998-99, 3.6 million tons in 2002-03, and 3.99 million tons in 2003-04, not enough to meet the domestic
needs.

The question is why did the government import the commodity worth Rs1,686 million, Rs153 million, Rs153 million, and Rs189 million during these years, causing
unnecessary burden on the exchequer. Despite these imports, the common man remained the sufferer due to uncontrolled hike in its prices.

It is not understandable that despite the production of 3.25 million tons in 2000-01, excluding the previous year’s stock, why the government had to import the commodity
worth Rs1,485 million. The reason could be the corrupt bureaucracy and politicians in the government who take commissions on the import of agricultural commodities rather
than making the country self–sufficient as in case the case of India and other countries.

The ineptness of sugar policy is evident from the fact that the government instead of meeting the domestic requirements first and reserving some stock for lean years allows
the export of the commodity. It should export the surplus and imports may be made when there is a deficit. The policy makers on one hand import sugar while on the other
allow the industry to export the same every year. As a result, the industry and exporters were able to earn Rs33,590 million from 1993-94 to 2002-03 while the government
spent Rs29,158 million on imports during this period.

Not only that. The government spent Rs189 million on its import during 2003-04 which is likely to increase. The country has already imported 60,000 tons from China and the
Gulf States, and 50,000 tons from Brazil. The Trading Corporation of Pakistan has been allowed to purchase 100,000 tons duty-free sugar from India out of which over 2000
tons is reported to have reached Lahore by September. India expects Pakistan to buy between 300,000-500,000 tons in the next couple of months.

The domestic production cost is high due to excessive cane production cost (75 per cent of the total sugar production cost) as compared to other countries. This is due to
low cane yield, low sucrose recovery percentage, high cost of inputs, rising electricity and diesel charges, wrong support pricing and policies, delay in payments to growers,
besides under weighing of their produce by the mills causing them an additional loss.

The late start of crushing season i.e., in November by the Pakistan Sugar mills Association (PSMA) does not permit timely sowing of the following wheat or other crops. This
will reduce the yield which will cause further loss to growers. As a result cane growers have shifted to other crops resulting in the reduction of area from 1.1 million hectares
in 2002-03 to 0.95 million hectares in 2004-05 and a fall in production from 52 million tons to about 45 million tons. Furthermore, use of 25 per cent of the production for
seed, for making Shakkar (brown sugar) and gur has increased to about 38 per cent which may further go up on account of smuggling to Afghanistan and the Central Asian
States.

Nevertheless, the high sugar production cost has made it difficult for the industry to compete with international producers. Consequently, the political lobby of the PSMA
pressurizes the government to give subsidies up to 30 per cent or more for enabling it to compete in the international market. On the other hand, they demand increase in
duties on the imported stuff for competing in the domestic market. This resulted in squeezing the growers and the common man thus forcing duty free import of sugar.

The minister has asked the farmers and technologists to increase cane productivity which will ultimately hike sugar output. He should have realized that cane is a high water
requirement tropical and subtropical crop mostly grown in the irrigated arid and semi-arid regions of Pakistan with no high yield potentials. Water requirement for the annual
crop at the root zone is 71-acre inch, while that of ratoon or perennial crop it varies from 80-100-acre inch per acre per year.

Most of the growers have shifted to perennial crop due to high cost of sowing annual crop and delayed payments by the mills to growers. The yield of such ratoon crop
begins to decline after the second year but due to the above-mentioned problems the majority of small farmers continue to grow ratoon sugarcane crop for 3-5 years thus
seriously affecting the yield.

The situation is further compounded by water thefts by the politically- influential feudal and politicians in connivance with the concerned irrigation departments. These
problems may further force the growers to shift to other less water requiring crops thus causing severe problems for the industry which was expanded purely on political
influence rather than on sound economic parameters keeping in view the future production potentials of the country.

Similarly, the cane breeders despite their extremely non-congenial research environments have released a number of high yielding and high sucrose percentage varieties. As
a result the average national yield per hectare of sugarcane has increased from 30 tons in 1960 to 50.3 tons in 1997-98 which again in 2004-05 declined to 47.8 tons.

Even the highest average yield of 50.3 tons per hectare is 74 per cent less than the potentials demonstrated at farmers’ field by the FAO experts in Pakistan in 80s. All
these observations clearly support the view that the present deplorable conditions and high sugar price is caused due to aridity, high water requirements and
mismanagement by the policy makers whose ultimate sufferer is the common man.

The minister has further stated that the government was pursuing the production of sugar beet to fill the requirement and production gap. The statement is questionable. For
example, despite various sugar beet development projects worth millions of rupees, the highest area of 15,700 hectares under sugar beet in 1980-81 has declined to 7,000
hectares by 2002-03 with a fall in production from 4,53,000 tons to 2,15,000 tons.

The major reason is that sugar beet is a Rabi crop which competes with wheat, pulses, oilseed etc., during this season when canal water supply declines. The water
requirement of 27-acre inch of sugar beet at the root zone is higher than the major crops like wheat (19-acre inch), pulses (12-acre inch), and rape and mustard (10-12 acre
inch).

Similarly, farmers prefer to grow Rabi vegetables which are more economical than sugar beet. It is mostly grown in the NWFP followed by Sindh, while it is not grown in
Punjab and Balochistan.

The policy makers, instead of making political statements must realize the harsh realities at ground level. They should seriously consider various alternatives as area under
sugarcane cannot be increased considerably in future due to its high water requirements, high production cost, and delay in payments to growers who are already shifting to
other crops. Thus, the policy makers should seriously consider various alternatives to meet sugar requirements of the increasing population. Some of which are given as
under:

If cost of imported duty-free sugar is lower than the domestic production then the sugarcane area may be brought under wheat plus cotton cropping systems. It will not only
save 38 per cent of the total water applied to sugarcane but will produce an additional 2.25 million tons of wheat and 6,00,000 tons of cotton including 4,10,000 tons of
cottonseed. This additional production will not only make us self-sufficient in wheat but will also help in saving billions of rupees spent on imports.

Likewise, it will increase the profit by exporting cotton and its bye-products. Extraction of edible oil from cotton seed may further reduce the edible oil import bill. The savings
thus made could be used to import cheap sugar. Again, 38 per cent saving in water could be used to increase area under oilseed crops to further increase domestic
production of oilseeds and reduce its import bill. This is just one example.

There are other cropping patterns that can replace sugarcane and bring greater income to the reduce burden on national exchequer and to control sugar price hike in the
interest of the common man by importing cheaper sugar. The other option is that since the cost of sugarcane production is very high, therefore, the economics of importing
raw sugar and its conversion to refined sugar within the country be studied.

However, the ministers and the politicians who are owners of sugar mills will never allow this change in sugar policy as they did in the past because to them personal
interest is more supreme than the national and the common man’s interests.
.

Courtesy: The DAWN

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