Sugar crisis hovering due to smuggling, lower sugarcane output

LAHORE: Sugar shortage is around the corner, which would increase the price of sugar due to less production, smuggling of gur to Afghanistan and banning of raw sugar import, sources in the industry told Daily Times on Wednesday.

They said that the shortage of sugar has touched 600,000 tonnes because of low production and high prices of sugarcane.

The price of sugarcane remained more than Rs 80-90 per 40 Kg while the price was Rs 50-60 per 40 Kg during the last year. The sugarcane production also reduced as compared with previous years. In 2006-07, the sugarcane was cultivated at 1029,000 hectares while the production was 54.8 million tonnes.

However, in 2007-08 around 13 percent area of sugarcane cultivation was reduced due farmers substituting from sugarcane to rice, said Farmers Association Pakistan Chief Coordinator, Tariq Bucha. He said that as result the sugarcane production reduced to around 47.6 million tonnes. He said that the sugar cane crop was bumper in the previous year and the millers exploited the farmers by paying less than Rs 50-60 per 40 Kg, which resulted in the shifting of farmers from sugarcane to rice crop. The price of rice was very attractive not only in the country but also in the region, Bucha said adding that ultimately the sugarcane cultivation area reduced. He said now the farmers are getting only Rs 80-100 per 40 Kg while there is no reality in sugarcane price of Rs 160 per 40 Kg.

The sugar production remained at 4.7 million tonnes in 2007-08 while this year around 3.2 million tonnes of sugar would be produced thus decline of around 23 percent. While the consumption stands at 4.2 million tonnes. The buffer stocks of the millers and TCP are around 600,000 tonnes. Around 200,000 tonnes of sugar has been smuggled to Afghanistan, where price of sugar is more than Rs 65 per Kg.

Pakistan Sugar Mills Association Chairman, Iskander Mohammad Khan said that the government of Pakistan in the Economic Coordination Committee meeting did not allow the import of raw sugar and as a result the price of sugarcane increased. “Instead the government announced to increase the price of sugarcane to Rs 80 per 40 kg and competition amongst mills increased the sugarcane price to Rs 130 per 40 kg,” he said adding that non-imposition of ban on the export of raw sugar resulted in the short production by Frontier mills to the tune of 50,000 tonnes.

He said that The sugar shortage would cost country around $322 million, provided the international prices remain at $400 per tonnes and freight $60 per tonnes. The PSMA Chairman said that timely import of raw sugar and ban on the export of raw sugar (gur) that encouraged smuggling of sugar would have saved $262 million.

source: dailytimes