The Union of Small & Medium Enterprises (Unisame) invited its SME sugar and sweets merchants to discuss the sugar crisis. Sajid Naqvi, Secretary-General, Unisame, who is a sugar technologist, explained the crisis and what caused it. He said the argument that the crisis is due to water shortage is only partially true. He said the main reason is the after effects of bad management at the time of surplus and not paying the cane growers their cost and forcing them to sell below their cost. If the government had kept the sugar industry viable this situation would not have arisen.
Another reason, he said, is the primitive system of agriculture. He said that in advanced countries they have 4 to 5 times recurring crops due to advanced technology whereas we have the seed plant and 'ratoon' crop only. He added that in southern zone of Sindh, which is a sugar growing area and where cotton is not grown, the ministry of agriculture should ensure sufficient supply of water for the sugar fields, namely in Badin, Thatta and Hyderabad, known as the sugar bowl.
Zulfikar Thaver, President of Unisame, urged the Trading Corporation of Pakistan (TCP) to release 400,000 tons sugar at affordable price and import sugar on top priority basis and fix the price of sugar in stock and imported sugar on the basis of average. He said TCP has purchased sugar at Rs 18 from the mills and now imported sugar will cost around Rs 24. So, TCP should sell at Rs 21. He said it is expected that we will need one million tons sugar.
Other participants said that investors are purchasing delivery orders (DO) from mills who need finance and are selling delivery orders to financiers who are reselling delivery orders at a profit of 25 percent, thus increasing the price--by speculation. The DO is usually for one truck of 200 bags of 50 kg each and mills give delivery to the bearer of the DO and in this manner the DO changes hands from one party to another.
Importers present in the meeting said that UAE was offering sugar @ $330 per ton and landed cost in Karachi would come to Rs 24 per kg as besides 15 percent sales tax there are about 12 percent expenses.
The country consumes 10,000 tons sugar daily and a small quantity of Gur which requires a special skill to make and only a handful of persons are in a position to make it, and even gur is costing around Rs 25 a kg there is no substitute.
Most sugar mills are owned by legislators and they are in no mood to make laws against their vested interests. The country needs about 3.6 million tons sugar and by September we expect to produce 2.6 million tons and will have a shortfall of one million tons sugar which needs to be imported.-PR
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