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Pakistan’s sugar industry: factors of production

Pakistan’s sugar industry: factors of production

Sources recorded that dissimilar types of sugar in Pakistan are manufactured which include pharmaceutical, beverage and commercial grades also soft brown sugar, castor and icing sugar, sugar cubes, sachets and retail packs. Ministry of Food Security has recently released the statistics of total sugar production in Pakistan, according to which, 7,905,564 metric tonnes of sugar was produced during 2021-22. Statistics identified that at least 51,706 metric tonnes (MT) of sugar stock was obtainable from the previous season while 70,000 tonnes of sugar, produced from beetroot, was available till the start of last season.

This shows that the total sugar available from the previous season and at the close of last season was registered at 8,027,270 tonnes. According to the Economic Survey of Pakistan FY2022, sugarcane is of great importance for sugar-related industries and 2nd largest agro-based industry after textile. Its production accounts for 3.7 percent of agriculture’s value addition and 0.8 percent of Gross Domestic Product (GDP).

The experts said that the higher domestic sugar price and better sugarcane procurement price incentivized growers to dedicate an additional area to sugarcane, favorable weather situations, better management and timely availability of quality inputs.

Experts in Pakistan also identified that sugarcane production is characterized by a shorter than normal growing cycle and relatively low yields when compared to international standards. Sugarcane is moved to local mills to manufacture white sugar or is utilized at the farm to manufacturing gur.

White sugar manufacturing is relatively modern. The making of gur and similar products like shakkar and desi cheni is, for the most part, a supplemental farm enterprise utilizing otherwise unused labor and animal power. It is said that the marketing of white sugar follows the usual marketing channels, directly to the consumer and indirectly by beverage manufacturers, bakers, confection makers, etc. Gur, outside of home consumption, is sold to local consumers, retailers and regional wholesalers. Homemade sweeteners like gur, shakkar and desi cheni are made by a process of crushing cane and boiling, treating and cooling the juice.

Statistics also showed that at least 5,316,473 MT of sugar has been withdrawn from the stocks or consumed till September 30, 2022. It shows that the daily sugar consumption stands at approximately 15,980 tonnes. It is expected that at least 1,736,017 MT of sugar will be available at the start of the next crushing season in November 2022. Furthermore, foreign exchange to the tune of $1 billion can be earned if this excess sugar is exported. Another $1 billion can be earned because of excess sugar production from the next season.

It is also said that recent rains have proved beneficial for the overall health of the sugarcane crop which can raise its yield capacity. This shows that in the next season, sugar will be produced in surplus quantity. For the last 7-8 months, the industry is demanding the government of Pakistan export this surplus sugar because, at that time, the rate of sugar in the international market reached $560 per tonne but because of the government’s indifference and non-acceptance of demand, it dropped to $528.70 per tonne till date.

Statistics analyzed that this incurred loss to the national exchequer to the tune of $31,300,000. The international rate of sugar will additionally drop to $427 per tonne in February-March which will cause a loss of $68,000,000 in case this excess sugar is not exported. Calculating the estimates of the previous and next year’s seasons, at least 3,561,697 tonnes of excess sugar will be produced so the government of Pakistan should export this surplus sugar to earn foreign exchange.

Industry representatives, on the other hand, have been demanding the resumption of exports since March 2022. At the time, various PSMA (Pakistan Sugar Mills Association) members said that the 2021-22 crushing season had yielded a surplus, possibly exceeding domestic demand by as much as 1.5 to 2 million metric tons (MMT). It is recorded that annual sugar output of nearly 8MMT, the record sugar production in Pakistan’s history. During the preceding 2-year, national supply (local production + imports) averaged 5.5MMT. Domestic markets recorded limited instances of price gouging as consumer prices saw a significant escalation, but no crisis.

During the last crushing season, experts recorded that our country finally completed a successful implementation of the Track and Trace system in the industry, hoping to bring large quantities of previously under registered sugar production into the documented economy. Truly speaking, as floods damaged standing sugarcane crops in Sindh and south Punjab, it looked as if export would no longer be required at all, as the carryover would be utilized to service the deficit in the upcoming marketing year.


In last I would like to mention here, the hard ground reality is that under the limiting economic factors affecting the sugar industry like areas under cultivation, lower yield, low sucrose recovery compounded by the arrear of cane growers payments, increasing trend of closure of sugar mills owing to multiple causes, lack of working capital finance and above all diverting a big portion of cane production for Gur manufacturing, it appears very hard to meet the local requirement. PSMA insists sugar mills would not be able to turn a profit if their cost of production (MSP) is raised, as retail prices might crash simultaneously because of significant carryover. Meanwhile, it is said that the government is relying on the oldest trick in the book, using the MSP as indirect means of cash transfer to farmers, to compensate them for losses during floods and higher prices of farm inputs. The government must pay attention to solving the issues of the industry.

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