.jpg)
2009-2010
| Click Index Items to read | |
|
1. |
1. Perspective
|
|
2. |
|
|
3. |
|
|
4. |
|
1. NEED FOR A HOLISTIC POLICY: The prime objective of an effective policy for the sugar sector is that while the consumers are assured sugar supply at a competitive price the producers and growers are also able to get a fair deal for their output.
1.1 OVERVIEW OF THE SUGAR INDUSTRY: The Country right now has 83 functional sugar mills of which 45 are in Punjab, 31 in Sindh and 7 in NWFP. The total crushing capacity of the mills is about six hundred thousand (600,000) tons per day. The capacity utilized by the mills is about 60-70% dependent upon the sugarcane production and sugarcane purchased by the mills.
1.12 Sugar production during 2007-08 was 4.7 million tons whereas, the production of sugar during 2008-09 stood at 3.19 million tons, a decline of 32%. The sugar production in 2009-10 is expected to be around 3.1 million tons. Such cyclical shortages warrant proper use of scarce foreign exchange to bolster depleting stocks on emergency basis. Stabilizing sugar prices especially during rising price trends necessitates subsidies involving a further burden on the National Exchequer.
1.13 Around 80 percent of the cost of sugar depends upon sugarcane which is the main input for sugar production. Sugarcane is grown with ease in the tropics and the sub tropics. However with climatic change and population pressures in sub tropical areas like Pakistan there is inter alia dire need to introduce the farming community to modern techniques that conserve water while enhancing productivity per acre like precision sprinkle agriculture; or to introduce alternate crops such as sugar beet etc.
1.14 Presently the sugar sector’s byproduct of ‘molasses’ is used as an animal feed locally or exported as raw material. It is however pointed out that 19 sugar mills have distilleries that produce both industrial and fuel grade ethanol from molasses. As such an objective National Sugar Policy in the holistic picture needs to cater to interests of the upstream sugarcane growers, sugar millers and the downstream production of ethanol. It is heartening to note that the government has recently introduced ‘ethanol’ as E-10 fuel for mixing with regular motor gasoline. It is expected that this will have salutary effects on the overall economy of the country as it will result in the saving of scarce foreign exchange.
2.1 SUGARCANE CULTIVATION TREND: The following table gives the Sugarcane scenario of the past eight years with fluctuating trend of cropping area. The growers need to be given targeted incentives to cultivate sugarcane of high sucrose content to increase the yield per acre and profitability for growers. This is pragmatically also required for efficient utilization of a sizeable investment already made in the sugar industrial structure.
|
Year |
2002-03 |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
2007-08 |
2008-09 |
2009-10 |
|
Sugarcane Cropped Area Hectares (000) |
1,099 |
1,074 |
966 |
907 |
1,029 |
1,241 |
1,029 |
951 |
SOURCE: - PAKISTAN ECONOMIC SURVEY AND MINFA
2.2 SUGARCANE PRICING AND SUCROSE CONTENT: Currently the ‘Sugarcane Price Notification’ ignores the sucrose content of sugarcane. Farmers growing high sucrose content sugarcane are not rewarded with higher price. The farmers producing low sucrose content sugarcane have no incentive to cultivate better varieties. Instead of using ‘quality content’ criteria in terms of sucrose all sugarcane varieties are still priced on weight. Even though Pakistan ranks sixth in terms of area harvested under sugarcane out of 16 major cane producing countries, we are placed at fifteenth on the list, in terms of both cane yield and sugar yield[1]. This shows that the sugarcane cultivation in Pakistan is faced with many problems and the situation needs to be addressed on priority.
3.1 CYCLICAL SUGAR SHORTAGES: The Sugar Advisory Board has been constituted to provide an institutional arrangement to resolve issues likely to be faced by the Sugarcane growers and the Sugar Industry. To meet any shortages between demand and supply, the Sugar Advisory Board has been advocating the import of raw sugar during the late crushing period. Raw sugar is generally around $ 60-100/ton, cheaper than white sugar and creates seasonal employment in the economy as well. The rationale to import ‘raw sugar’ during the crushing season is that its processing is viable costing Rs. 4.50 to Rs. 5.00/Kg while after the crushing season it costs around Rs. 8 /Kg.
3.2 FUTURE SUGAR DEMAND: Our population was 31 million at independence in 1947, stands at 170 million today and is expected to touch 208 million in 2020. [2] This situation demands that concerted efforts are made to aim for self sufficiency in the production of ‘sugar’ an essential food item both for the present and for the years to come.
3.21 The Federal and Provincial governments have been periodically introducing policy measures to facilitate sugar millers and sugarcane growers.
3.22 The Sugar Sector globally, particularly in the recent past has been found susceptible to international market fluctuations, weather vagaries as well as a host of other variables like pricing of other agriculture commodities. The general aim of this policy is to strike a fair balance between the interests of the consumer, sugarcane grower, sugar miller and to cater to unforeseen sugar shortages.
4.11 Market forces to decide sugar price; protection for vulnerable groups; assistance for lower income groups: As a principle, sugar price shall be determined by market forces. The Government concurs with the opinion of the Commission appointed by the Supreme Court of Pakistan in CP No.1709 et al that the cost of production of sugar varies from mill to mill, region to region and from province to province.
4.111 Benazir Income Support Programme (BISP) for the vulnerable: The Government is seriously considering shielding the targeted vulnerable groups, comprising around 34% of the population living on or below the poverty line, through BISP. The transparent scheme will subscribe to international standards monitored through debit cards where the holder shall be able to purchase sugar at a subsidized price from the designated Utility Stores Corporation (USC) outlets or depot/fair price shop/mobile stores to be set up with the assistance of the Provincial Governments. The Ministry of Finance will supervise the scheme and provide updates on implementation periodically to the Cabinet. It will entail the following essential interventions to ensure that the delivery is free of any misuse and reaches the target population:
i) BISP to initially provide relief of 10-20 percent in price from the market price of sugar.
ii) The cost of the differential shall be shared equally between the Government and the Pakistan Sugar Mills Association.
4.112 USC intervention to provide relief to the low income groups: The government intervention to provide sugar at affordable prices shall continue through Utility Stores Corporation (USC). USC shall be financed to make purchase of 0.5 million tons direct from Sugar Mills so as to avoid the complications of payment and getting supplies from Trading Corporation of Pakistan (TCP).
4.12 Uniform price of sugar: For the eleventh month of the calendar year 2009 sugar meant for household consumption shall be sold at the uniform price of Rs. 40 /kg in every nook and corner of the country; the respective Provincial governments will designate kiryana/retail shops/ any other arrangement in appropriate localities as, ‘sale point/ ration depots’. This countrywide intervention will require 100,000-115000 tons of sugar to be supplied by Sugar Mills meant for household consumption.
4.13 Raw and White sugar import and timing: In view of the Pakistan Sugar Mills Association’s (PSMA) unwillingness to import raw sugar, 0.5 million tons of Raw Sugar shall be imported this season by TCP/Private sector to arrive in January 2010. Its release shall be monitored by a Committee headed by the Finance Minister. Additionally 0.5 Million tons of White Sugar shall be imported by TCP. To ensure that the quantity is not over procured, State Bank of Pakistan shall not open Letters of Credit beyond 0.5 million tons each for White and Raw sugar. The detailed modalities of import of White and Raw sugar shall be worked out by the Secretaries Committee.
4.14 Maintaining strategic reserves:
Trading Corporation of Pakistan (TCP) shall maintain strategic reserves of 0.5 million tons of white sugar at any one time. These will be replenished through domestic or international procurement as deemed appropriate considering competitive price and local demand. The modalities would be periodically reviewed/finalized by the Secretaries Committee.
4.15 Smuggling and Gur ban issue: Manufacturing of ‘Gur’ in NWFP may continue; however export of ‘Gur’ may be banned forthwith.
4.16 The Crushing Season timing: Provincial Governments shall ensure that the crushing season annually commences latest by 1st November in Sindh and 15th November in Punjab and NWFP.
4.2 Long Term Policy:
4.21 Sugar Market Pricing: The domestic market will be integrated with the international market by providing necessary tariff protection. A study may be undertaken to redefine details of achieving fully competitive market for sugar trade.
4.22 Price of Sugarcane to be fixed according to Sucrose content: Mechanism of pricing sugarcane on sucrose content shall be introduced in all the provinces. As recommended by the Sugar Advisory Board the prices be fixed variety wise initially and afterwards the pricing methodology shall be upgraded in phases in accordance with the best international practices. To achieve this purpose as a test case two to three Mills in each Province will be encouraged to subscribe to this practice during 2009-10.
4.22 Cane Purchase Receipt: Cane Purchase Receipt (CPR) shall be used as a ‘Negotiable Instrument’ subject to an operational procedure and legal evaluation as advised by the State Bank of Pakistan. The system needs to be introduced as soon as possible.
4.23 Research and use of high yield/high recovery varieties: Provincial Agriculture Research Institutes in collaboration with the private sector shall evolve site/area specific sugarcane varieties through Research and Development of high yield/ high recovery characteristics. To supplement the existing initiatives two dedicated projects with latest technology based on public-private partnership are being set up to be executed by Ministry of Food and Agriculture.
4.24 Sugar production from sugar beet: Sugar production from sugar beet shall be encouraged as a Small and Medium Enterprise (SME) activity to supplement domestic sugar needs. This shall be incentivized through fiscal measures under supervision of MINFA. Provincial Governments should encourage the requisite technology shift for the existing mills from sugarcane to sugar beet and consider setting up of new sugar beet mills.
4.25 Weighbridges & Sucrose testing facilities monitoring mechanisms. To redress complaints of manipulated weighbridges that deprive farmers of their just payments, Provincial Governments may inter alia use the ‘Sugar Cess Fund’ to monitor ‘kunda’ (scales/weigh bridges) and sucrose variety testing stations to ensure impartial testing and weighing facility for growers.
