Earlier this week this column shed light on the area under major crops in Pakistan with an emphasis on wheat (published Monday). Todays column seeks to take the discussion further, this time with respect to sugarcane.

We asked the question, why has the area under sugarcane not increased by as much as wheat over the years? Surely, one of the reasons of the popularity of the wheat crop is the support price. The only other crop with a support price sugarcane has not seen the same drastic increase despite its support price being higher that wheat, at least in relative terms.

Firstly, taken in absolute terms, the CAGR of area under sugarcane is the highest of all crops (1.03%), followed by rice (0.89%) and then wheat (0.78%). The ongoing year has also brought a dramatic increase, with sugarcane and maize accounting for 35 percent of the area lost in cotton, as per SBPs quarterly report on the economy. Particularly, Rahimyar Khan has emerged as a new sugarcane-growing location.

Secondly, Pakistan is already producing more sugar than it needs. There are currently 90 sugar mills in Pakistan, all of which operate below their installed capacity. At 4.8 million tonnes consumption (as per the USDA), sugar production will be over 5.7 million tonnes this year.

So there has indeed been some increase in sugarcane plantation and sugar production over the years. However, as a percentage of total cropped area, sugarcane went from 4.36 percent in FY01 to 4.99 percent as of FY16, whereas wheat grew from 37.1 percent to 40.9 percent. BR Research spoke to a couple of industry sources, who highlighted possible reasons for this.

Firstly, sugarcane is a water-intensive crop. Over the years, water availability has declined and the country has officially become water-scarce. This has restricted sugarcane cultivation in the country. Secondly, unlike conventional crops, sugarcane season is all year long; the crop grows for around a year before being harvested. A full year means liquidity issues for the grower. Add to that the much-publicised issue of payments to growers and politicisation of sugar and you have a relatively exclusive crop at the end of the day.