Pakistan Agriculture News, Sugar Cane

Sugar industry faces low-price challenge

Karim Bakhsh Malik,

Dr Muhammad Ijaz Tabassum

Sugarcane has the largest industrial base after cotton in agricultural sector of Pakistan. For the last 2-3 seasons there has been unrest in growers’ community and the sugar industry .

Growers claim an enhanced rate of cane and timely payment to growers; while the Pakistan sugar industry claims that their economic viability is at stake due to low market prices of sugar against the prevailing price of cane fixed by the government.

According to them a number of sugar mills are at the verge of insolvencies. Considering the enhanced prices of inputs involved in cane production and livelihood of a common man, growers claim can’t be ignored and has its weight.

On the other hand, millers issue is also complicated and need to be analyzed.

Periodic sugar recoveries of some sugar mills in the province Punjab are 10.52 percent for JDW, RY Khan, 10.48 percent for  Hamza, Khanapur, 10.43 percent for Indus, Rajanpur, 9.95 percent for Noon, Bhalwal and 9.63 percent for Hussain, Jaranwala.

On the other hand, sugar recoveries of sugar mills located in the Sindh are reported maximum (11.44 percent) in Mehran Sugar Mills Tando Allahyar. Similarly, 10.85 percent in Faran, Hyderabad, 1075 percent in MPK, Mirpur Khas, 10.71 percent in Shah Murad , Jhok sharif , 10.35 percent in Habib Nawabshah, 9.95 percent in Al Noor, Morro  and 9.84 percent in Ansari, Matli during 2016-17.

Now, the fixed cane price of Rs. 180 per mound, a recovery level of 10.5 percent is a bench mark for economic viability of sugar industry .

It indicates that to attain an economic level, this sugar recovery (10.5 percent) would be a target to achieve, by the Pakistan sugar industry .

How to achieve and till when to achieve is the point to be focused by the sugar industry .

At the same time growers demand an appreciable rise in cane price . If it happens the recovery target would eventually be changed, and till what a level and what would be the end.

One apparently feels that burden is thrust on sugar industry .

In sugar production, both parties, the cane growers and the sugar industry are dependent on one another, their co-existence in the field demand economic viability of both the partners.

In the present economic scenario growers are screaming as to why they grew the cane crop while millers are suspended as to why they manufactured the sugar and now where to dump.

In open market system, the sugar price can’t be controlled by an order. However, one has to keep an eye on price fluctuation and demand and supply position of the commodity.

Government has to take steps to control the situation. Commodity prices are also affected by available stocks in international market and this should specifically be visualized by the government. Unfortunately, the government don’t seem to be much serious on sugar issue.

During October – December 2016, international sugar market was at around $500-550 a ton. A plenty of previous year’s sugar was in stock and the prevailing cane crop (2016-17) having a vigorous growth was expecting a record sugar production. Besides repeated requests by the sugar industry , government did not allow to export the surplus stocks. The result is over production and bumper stocks to create present crises amongst growers and industry . At the present international prices of Dollars 360 a ton, there are rumors for sugar disposal on certain subsidy prices; what a fun?

The present average sugar recoveries of 9.5 percent can be increased upto 11,5 percent by adopting improved agricultural practices.

For this, planting time, fertilizer-irrigation & harvest management, precautionary measures in diseases along with insects and cane procurement strategies. No doubt, cane variety is the single most dominant factor in improving sugar mills recoveries.

High sugar early maturing varieties have the potential of giving 11.5-12.5 percent recovery. A number of high sugarcane varieties have been released by Sugarcane Research Institutes in Pakistan, during the past decades.

These are BL 4, BF129, Thatha-10, SPSG26, NIA2004, Thatha 326, CP 77-400, HSF 240,  HSF 242, SPF234, CPF237, CPF246 and CPF 248.

Cane growers should have a set of two or three varieties grown at their farms. This is to sustain the ill effect of sudden weather changes under global warming situation.

It is somewhat like the system adopted during rationing days that sugar pricewas fixed for its supply to consumers as a fixed ration on Depots.

Sugar was purchased by the government and this system was an assurance to millers for complete utilization of their product (sugar) on advance payment.

This system also assured timely payment to growers for their cane supplies to nearby mills. With adoption of De-zoning policy by the Govt., fixation of sugarprice was altogether abandoned and growers are open to dispose of their cane to any sugar factory they like for which a minimum cane price is fixed by the government. Now the market is open both for cane supplies, cane purchase and sugar disposal.

Marketing trend sometimes favor growers and other times to millers. Sugarcane Act has some regulations to keep the system in order, but there are lacunae and limitations in policies that any plan of sugar recovery improvements cannot be implemented.

This is not a new approach the system is already in vogue in Pakistan. A minimum cane price is fixed for a bench mark recovery of cane and a quality premium of Rs.0.50 is allowed for every 0.1-unit increase in recovery over the bench mark recovery of 8 7 percent in Sindh and 8.5 percent in Punjab. The system remained in operation for a year or so, growers, supplying quality cane to the sugar mill were greatly benefitted.

Unfortunately to get some clarification millers went to the Supreme Court and the implementation was suspended as a legal stay order, as such government notification for quality premium was held in abeyance.

Sugar is sold by a board comprising members from millers, growers and the government. Growers are given the payments based on their sugar recovered from their cane supplied to the factory. It is a fool proof system with its successful implementation.

It may be taken as guaranteed that Sugar Board has strict eyes on national and international sugar market and no member likes to go in loss.

Details may be discussed and worked out. aforementioned methods are direct or indirect approaches for initiating the growers to adopt measures to grow quality cane having high sugar contents.