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Causes of sugar crisis              
By Dr Ali Muhammad Khushk and M. Ibrahim Lashari

Sugarcane is the second largest non-food crop after cotton and ranks fifth in respect of acreage. Prolonged drought and heat stress decreased its production by 22 per cent in 1999-2000, and further 17 per cent in 2000-01.

Of late, there has been confrontation between growers and millers over price. Growers demand higher price for their raw material and millers complain about increase in production cost and imports.

Late crushing causes dissatisfaction as well as financial loss to both, farmers and millers. Other problems are stagnant cane yield, non-payment of dues to growers by mills, and low import parity prices.

A study it revealed that more than 65 per cent farmers have decreased the total area under cane production due to water shortage, behaviour of the mills’ management, late payments, increased input cost, and diseases and rodent attack.

Constraints faced by the growers are underweighting of cane at purchase centres and mill gates, undue deductions by mills up to 10 per cent, delays in payments, middleman, obtaining an indent, and the payment of premium.

The price structure is such that out of the sale price some 35 per cent of the cost goes to farmer and 24 per cent to the government in taxes etc., 21 per cent to mills with nine and six per cent to wholesalers and retailers respectively. The country exports sugar at low price and imports the same at high rates.

Transporters, particularly trolley-owners also exploit mill owners by demanding additional Rs250–300 per trolley during cane shortage, while a delay in unloading at the gate incurs an additional Rs100 per day for trolley along with the provision of food and tea for trolley drivers etc by the mills.

The government intervenes by issuing export permits to mills, importing sugar on public account and controlling retail distribution below the market price through utility stores.

Production, consumption and demand play an important part as production depends upon support price. The support prices of sugarcane affect the production cost and uncontrolled factors such as weather and technology. The volume of cane crushed is mainly related to production, milling capacity and prices of cane and gur.

Consumption relationship indicates the price elasticity for refined sugar as four and income elasticity as eight in nominal terms. This implies that relatively small change in cane supply causes more proportional increase in sugar price.

Sugar mills, producing in excess to market’s demand are portrayed as going through a difficult period and in need of the state support. Thus many are provided the government’s assistance in a situation that is not the responsibility of the state.

It is a case of state backing a resourceful segment for the exploitation of national resources and rake off operations against the general public. Mills owners are one factor in building the sugar crisis- their reluctance to pay growers the right price promptly.

The purchasing of excess stocks from mills and delayed payments to growers, and delay in crushing are bad aspects for the industry.

Another aspect of delay in crushing causes a negative impact on wheat crop that replaces it in many fields across the country.

These factors create shortage thus increasing the price of the commodity. These factors are manoeuvred towards a specific end by a plan jointly managed by the elements that should have been working to control the price escalation and meet the shortage.

The latest move to resolve the crises is a strange one. Supply to the Utility Stores has been doubled with a view to providing relief to public.

The Utility Stores are selling one kg of sugar for Rs27, while in the market it is available at Rs37-38. A price difference of Rs15 is unheard of and, to the say least, is not natural.

There is an upward trend in sugar price in the international market but the almost double domestic rate is simply not justifiable.

The shortfall of up to one million tons could be eased if the buffer stock available with the Trading Corporation of Pakistan (TCP) is utilised. The stock has cost the TCP Rs18 per kg.

Policymakers have failed to realise the gravity of the situation. Instead of checking the price hike, a free hand has been given to hoarders and profiteers, operators of the utilities stores for forcing consumers to buy other items if they sought sugar at controlled price.

The government has failed in adopting a proper agriculture policy. There is no planning at any level for important crops, including sugarcane, and no monitoring system.

Sugar crisis persisted despite the fact that some two million tons was produced and a huge quantity imported. The country’s requirement is four million tons a year as against the supply of six million tons produced by more than 70 sugar mills.

Although, the government intervention is limited in keeping the prices at a reasonable level but maintaining self-sufficiency in sugar production, static yield and weaknesses in existing regulations are few problems facing the industry.

There is a need to appoint an investigating committee to probe the causes and suggest steps to revitalise the sugar sector. The committee should consist of experts from the agriculture, marketing, pricing, industry, sugar technology and the financial institutions.

There is need for seed treatment in sugarcane cultivation. Agencies such as research and extension department should be directed to enhance the knowledge of growers through demonstration.

Sugar mills should be bound to arrange and distribute seeds of high yielding varieties on easy terms to enhance production and to reduce poverty.

Awareness among farmers on the balanced use of fertilizer be enhanced and the government should take necessary steps to increase its supply at reasonable rates and at proper time.

Demonstration plots should be organised by the Extension Wing of Agriculture Department at least on village level to disseminate information among the farming community in an effective manner.

Courtesy: The DAWN

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