According to a report in this newspaper yesterday, wholesalers in Akbari Mandi of Lahore claim that daily sugar consumption in the provincial capital “is 12,000 bags of 100kg”. If this estimate is anywhere close to the national average, it should throw a spanner in the works, and jolt the government into allowing immediate import of the commodity on commercial basis.
Going by various estimates, the population of Lahore district is anywhere between 11 to 12 million inhabitants. At this rate, Lahore’s consumption per capita would be close to 37kg per annum. One may argue that Lahore is a major consumption centre and houses various industries and commercial enterprises that consume sweetener as a raw material; thus, consumption elsewhere in the country may be lower.
But how much lower? The industry’s official publication – the PSMA annual report - maintains that per capita consumption has remained (almost) constant at 25kg over last decade, which is nearly 50 percent lower than the estimate for Lahore. If the industry’s estimate is to be believed, the ongoing marketing season (including first 3 months of next year) should be smooth sailing, given consensus estimates of 5.5 to 5.8 million tons (and taking into accounts stocks of 0.3 million tons already imported by the TCP till December 2020, and plans of additional imports of 0.5 million tons by June 2021).
However, if the national consumption is even as high as 30 kg per capita, Pakistan may still continue to witness a shortfall, as even the 12 percent increase in Punjab’s output may struggle to fill the gap. According to discussions with provincial cane commissioner, the crushing season in the province has ended with production of 3.73 million tons, which places provincial production at par with levels achieved in surplus season of 2017-2018. On the other hand, KP’s contribution may fall short by as much as 0.1 million tons given claims of substantial crop diversion for gur production; however, it shall have no significant impact on overall equilibrium given province’s puny contribution of 6 to 7 percent to national consumption.
The wild card, however, will be Sindh. Unlike Punjab, Sindh has witnessed no notable improvement in crop levels compared to past two seasons. That means assuming contribution of 4 million tons by Punjab and KP (a reasonable assumption at this stage), Sindh’s performance can either save the day, or throw the supply-demand equilibrium out of whack.
For reasons not understood, PSMA has reported a very high crop utilization level in Sindh over the past decade, averaging easily at 99 percent between MY10 and MY19. In sharp contrast, crop utilization level in KP has averaged as low as 60 percent, as rest of the raw material is understood to be diverted for gur production. Crop utilization levels in Punjab usually fall somewhere in between, averaging close to 75 percent. Sindh also produces higher quality crop, where recovery level has averaged over 10.2 percent during past decade.
But something unthinkable happened during crushing season, 2019-2020. Crop utilization level in Sindh dropped to below 80 percent, not seen in at least past 20 years. If that situation persists, Pakistan may achieve national output of no more than 5.4 million tons, grossly insufficient to last through November and December 2021. On the other hand, if crop utilization level in the province is restored to historic average, national output may be restored to 6 million tons, removing the uncertainty that has rocked the domestic market since last year.
The government has two ways to address this volatility before the proverbial mud hits the fan come Ramzan and peak consumption summer season. One, take a quick assessment from the factories in Sindh, and allow immediate imports if it finds that provincial output is less than 1.8 million tons. Two, conduct a scientific survey of national demand trends to confirm whether national consumption is anywhere close to 30kg per capita. If both roads will lead to import, why dither at all?
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