Sugar crisis- A way forward

Ghulam Idris Khan

A lot has been discussed with the pros and cons in print and electronic media on the report of wheat and sugar scandal submitted to the Prime Minister. The Pakistan Tehreek-e- Insaaf (PTI) government has made some cosmetic changes in shape of reshuffled ministerial slots. The architect of this government installation Jahangir Tareen commonly known as ATM of the Prime Minster Imran Khan is in the line of fire from the media and public at large. The Prime minster has promised to the nation that drastic action will be taken once the forensic audit report lands the prime minister office. The Pakistan Sugar Mills Association (PSMA) has termed the findings of the inquiry report as one sided and based on propaganda and publically informing that the ”The sugar mills owners will not accept the forensic report’’. Big political heavy weights are the owners of large number of sugar mills operating in the country directly or indirectly.

The sugarcane is high cash industrial crop feeding about 88 sugar mills and also instrumental for village level small sugar extraction units making Gur (Jaggery). It covers an area of about 3.0 million acre and produces 6.8 to 7.1 million tons of sugar annually, with always surplus production of more than 1.5 million tons. A deep rooted perennial high delta crop with water requirement of 1400 to 1800 mm with low per unit yield as compared to with other sugarcane producing countries. Every year farmers face problems in disposing of their produce due to controversy on support price and mill owners demands for export with subsidies due to surplus production

According to the PSMA the cost of production of one ton of sugar is more in Pakistan and they cannot compete with other countries in international market if subsidy is not allowed. In the back drop of national debate in the media, PSMA has floated advertisement in National English daily of the country and asked some pertinent questions from the government. For example, the sugar industry is regulated under Cane Act and is the prime minister aware of the Act? They raised the issue of 17 percent sales tax on sugar while the sugar is in the list of essential commodities and part and parcel of food basket, then why a common man is contributing PKR 50 billion of sales tax in the shape of 11 Rs per kg. The sugar mills associations has blamed farmers and government for subsidies, the surplus production of 4.0 million tons in 2017 and 2018 in two years and delayed approval by the government of Pakistan when the international market crashed from 550 USD per ton to 325 USD per ton, only then the government allowed the export which was not feasible considering the slumped price. If the decision of export was taken at a proper time, the need of subsidy would not have been necessary.

As per the calculations of Ministry of industries and production, the cost of one tons of sugar produced is PKR 72,000 whereas mills association believes it to be PKR 83,000 per ton including sale value of Molasses, Bagasse and Mud. This come to around 450 to 513 USD per ton, while sugar price in international market per ton is 330 USD, so export without subsidy is bleak proposition. On the other hand, if export is not done, the quantity will pile up and sugar cane purchase in the next season will not be possible and farmers will suffer.

Every crisis always end with some positive indicators, this wheat, sugar crisis can be converted wisely on prosperous path for all stake holder e.g. government, farmers and mills owners.

The government of Pakistan should come forward and transform this crisis into opportunity by orchestrating a policy to create balance in supply and demand in such a way that raw material for sugar industries be made available at rational price and farmers should not suffer in the disposal of the cane at government support price. Pakistan is at the sixth number in terms of acreage of sugarcane and at the bottom in terms of per unit yield, even India and Philippine are better than us in per unit yield because our focus is on the expansion of crop area and not on per unit output. This gap can be bridged by adopting scientific approach towards this crop. Pakistan being an agricultural country and have good soil and climate but is deficient in certain food commodities in which edible oil tops the list. About 78 percent requirement of edible oil is imported at the cost of 3.5 billion USD. Sunflower is the major oil producing crop in the world and well adopted in Pakistan too.

The sunflower crop acreage in recent past touched upon 1.2 million acres which shrank later on. If proper strategy with the targeted design is formulated, to increase yield of sugar cane, about one million acre can be converted to sunflower cultivation, the space earlier occupied by sugar cane. It will produce 1.2 million tons of sunflower seeds which will be crushed by solvent extraction units which presently are underutilized or import material to run the plants. By doing this, an additional half a million ton of quality edible oil be yielded in the country and huge amount of foreign exchange will be saved.

The area lifted for sugar cane with the advanced farming technology will yield sufficient sugar cane production which will be enough to meet domestic requirement of sweetener, and if illegal trade (Smuggling) to the neighboring countries is controlled, the hue and cry of the farmers and mill owners will be dealt with as there will be no surplus produce nor they will ask government of the day for subsidy.

Here the farmers and provincial agriculture department will play the pivotal role to educate the farmers to switch to other crops like Sunflower. By adopting this methodology the huge import bill on edible oil will be reduced at the tune of half a billion USD and the sugar mills will not ask for export or export subsidy. The farmer on the other side will benefit from both ends as reasonable good price will be offered by both solvent extraction unit and sugar mills for their respective crops due to balance in crop cultivation.

Activities should be generated in the farming community and huge amount be paid to the farmers by purchasing their produce, irrigation water can be saved as sunflower is short duration crop of 100 days as compared to sugarcane crop of about more than one year. In the meantime, the farmers can cultivate some other crop or vegetable for good earning.

Now the ball is in government of Pakistan’s court to resolve the issue perfectly or leave the public at the mercy of sugar mill owners by not designing such policy to overcome this bottleneck of sugar cane prices and export issue with the subsidy.