Linking price to quality

The government has decided in principle to link sugarcane price with the quality of the crop, and a consultative process in this regard will be started this week to fashion a policy framework that will serve as a yardstick in the coming years, says a Recorder Report.
According to sources quoted in our report, the step is being taken amid a tense situation for the farmers, as most of them are not being given the price fixed by the government for their produce. The government has, meanwhile, drawn considerable flak for its failure in formulating a long-term strategy for sugar industry.
The absence of a long-term strategy has created problems not only for sugarcane growers and sugar consumers, but also for the sugar mills. There is a perception that the growers' financial gain needs to be linked to sugarcane yield. And it is the quantity of sucrose recovery that will serve as the key determinant in fixing the sugarcane price by the millers.
Incidentally, the yields and recoveries in Pakistan have been among the lowest in the world. For instance, Pakistan's sugarcane yield in the past one decade, with the exception of 1997-98, has ranged between 37 and 47 tons per hectare, though there is a vast potential to raise it to 90 tons per hectare through use of scientific cultivation techniques.
It is said that the yield can be increased even to 100/120 tons per hectare through use of R&D methodologies. Further, the quantum of sugar recovery can be improved from the present 8.7 percent to 10/12 percent through sucrose enrichment in the sugarcane.
If sucrose recovery is around eight percent, the farmer will get the price in accordance with this formula. If the recovery increases, the price will increase too, but if the recovery decreases the price will also go down. This co-relation will serve as the primary benchmark.
According to the new procedural parameters, the sugarcane on reaching the mills will be tested for its sucrose content, and the price will be fixed on the basis of the sample's result.
The idea behind linking sugarcane price to the quality of the crop is to encourage scientific sowing and harvesting of sugarcane, which can go a long way towards putting the entire sector on an even keel. This can also help generate greater awareness among the farmers of the need for timely harvesting of the crop, as late harvesting leads to a reduced sucrose content.
Surprisingly, despite manifold increase in the area under sugarcane cultivation in the country, the per-hectare yield has not shown a significant improvement, and ranged from 42 to 49 tons between 1970 and 2003, which was the lowest among sugarcane growing countries.
Secondly, Pakistan remained a sugar importing country where demand outstripped supply for most part from 1962 to 2000. However, the situation changed in 2000, when the country produced surplus sugar, which created huge closing stocks. This was due largely to the increase in the number of sugar mills in the country from two in 1950 to 76 in 2004, which represented a sharp rise in the country's crushing capacity. (Out of the 76 units, 25 have capacities ranging between 6000 and 9000 tcd, 29 units between 4000 and 6000 and 22 units have each a capacity under 4000 tcd.)
Proper utilisation of the by-products of sugar industry is necessary for the development of this sector. The cost of sugar production is continuously growing due to non-utilisation of the by-products. If the by-products are properly utilised, the cost of sugar production can be cut down by 20% to 25%.
There is a vast scope of value addition for molasses, for instance. Final molasses contains 30 to 40 percent sucrose, which can be economically utilized for value addition. Molasses is industrially the most important raw material in the manufacture of a variety of products such as distillery products, chemicals like lactic acid, citric acid baker's yeast, acetone, butanol, and aconite acid, which are important chemicals used in various industries.
Due to its chemical properties, molasses can be mixed directly with other products or can be used in more complex chemical processes for the manufacture of high quality products. In short, the sector contains huge potential that needs to be tapped by using scientific methods of cultivation and harvesting.
The decision in principle to link sugarcane price to the quality of the crop is a move in the right direction. As the formula is already being practised in Sindh, the province's experience in this regard can serve as a useful precedent for other provinces to follow.
Secondly, the new pricing benchmark will help resolve, once and for all, the sugarcane pricing problems, which have often led to clash of interest between sugarcane growers and millers. Above all, this will provide a powerful incentive to the growers to go in for scientific sowing of sugarcane, which will provide a powerful fillip to sugarcane crop yield.