A baffling level of discrepancy exists in yield and recovery levels within and between various sugarcane growing and milling regions in the country. While common wisdom dictates that farming regions most productive in crop output also grow the best variety of cane (in terms of sucrose output per ton), numbers fail to corroborate this.
Punjab, the heartland of Pakistan’s agriculture, produces on average two-thirds of country’s total sugarcane annually. The province also has the highest number of mills, 45 out of 91, which is natural considering the crucial role farm-to-mill gate proximity plays in ensuring profitability both for farmers and the mill owners. As one of the most water thirsty cash crops, cane is also most suited for Punjab, given the province’ lion share in canal water courses from the irrigated plains of Indus delta, and fitting location as upper riparian.
Thus, it is of no surprise that the province has historically led the way in producing the highest yield of cane in the country. Distance from target yield - often measured by productivity in Brazil, world’s top producer – is also not very far, at 74 tons per hectare.
Sindh, in comparison, has only 25 percent share in annual crop output for the country, yet manages to produce close to 35 percent of annual sugar output. This is in sharp contrast to Punjab, whose contribution to sugar output is below par, at only 57 percent on average.
Common explanation for Sindh’s better performance in sucrose recovery levels is often attributed to traditionally larger landholding sizes in the province. Even so, the climatic conditions of the provinces are highly unsuited to sugarcane growing, especially since the lower riparian receives irregular supplies of canal water, and groundwater in rural Sindh is highly saline and unsuited for cane growing.
Moreover, while farmers in Punjab may on average have smaller landholding sizes, zoom in and one discovers that Sindh’s purported disadvantages nearly disappears in most popular cane growing areas of south Punjab.
Nevertheless, only six mills in the Rahim Yar Khan district manage to post recovery levels at par with those achieved in Sindh on average, with mills from other south Punjab traditionally feudal districts showing recovery levels in line with provincial average.
What, then, explains Sindh’s advantage remains a mystery? One explanation alluded to by industry insiders is a possible gap between recovery levels of listed and non-listed players. Except, listed players from Punjab in MY18 posted average recovery of 9.43 percent versus 9.52 by non-listed. In similar fashion, listed and non-listed mills in Sindh also posted recovery levels in proximity to each other, 10.6 and 10.45, respectively.
One might argue that since Sindh has the highest number of listed players, 15 out of 29, that forces private limited concerns in the province to restrain their desire to under-report recovery levels, and by extension suppress revenue and profit numbers. In contrast, since the sector in Punjab is dominated by private-limited mills, firms are in a better position to suppress their recovery levels, not in cahoots but definitely enabling each other.
The latter explanation relies on the assumption that actual sucrose yields in the country are not all that far from global averages, and the numbers announced by millers are usually underreported to suppress sales. There is little evidence to confirm or deny either claim, except for the inexplicable discrepancy in figures from Punjab.
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