According to a Recorder Report from Islamabad, the Pakistan Sugar Mills Association (PSMA) has informed the authorities in writing that the crushing season 2006-07 has ended with sugar output of 3.520 million tons, compared to 2.650 million tons last year.
Evidently, viewing the situation with a high degree of optimism, it has further noted that this time the overall recovery rate also has been on the higher side, basically due to the heavy winter rainfall. Apparently enthused by the increased output this time, it has pointed to the prospect of further increase in sugar estimate.
For, as it is reported to have stated, although all of the sugar mills have stopped crushing, reports from a few units are still awaited and so addition of a few more tons of sugar to their figures can hardly be ruled out. So far so good. But the final shape of things to emerge cannot be foreseen with any degree of certainty. For it will be noted that although the sugar economy has witnessed both lean and robust years, crisis of one kind or the other has, almost always, been its bane. Resultantly, those who suffer from this predicament happen to be consumers and small farmers, or both together.
Be that as it may, the fact remains that despite government's effort to bail them out, consumer relief from lower sugar prices has remained a tall order. It will be noted that, notwithstanding the size of the crop, its disposal remains marked with too many obstacles, errors, or omissions, thereby ending up in shortage of sugar in the economy. In so far as the new crop's output from crushing is concerned, it may yet leave a great deal to be desired in terms of the overall sugar stock.
In this regard, reference may be made to lifted stocks, which on April 15 were reported to have stood at 1.5 millions tons, leaving around 2 millions tons unsold sugar with the mills. Adding this to the buffer stock with the Trading Corporation of Pakistan (TCP), total available stock will be seen at around 2.5 million tons. Now the total stocks thus available would suffice no more than eight months' consumption. This can be a warning of yet another year of shortage and high prices.
Evidently, this may be the reason why, seemingly learning some lesson from the recent years, the government has set up a Secretaries Committee, headed by Salman Shah, Advisor to Finance Ministry, to interact with PSMA, to ward off another severe crisis. Whether this can lead to the desired result cannot be said with certainty. Mention in this regard, may be made of the Punjab Zone PSMA meeting held in Lahore on Monday almost simultaneously with PSMA's optimistic view of the situation.
This meeting was held in connection with the preparation of an enabling work plan for discussion at the forthcoming Secretaries body. But according to a Recorder Report from Lahore, pointed reference was made at the meeting to heavy losses suffered in most parts of the province. This can be viewed as taking the shine out of the overall expectations of the millers' national association. However, it may not be taken as a bolt from the blue either.
For the crushing season 2006-07 had a number of peculiarities compared to the past seasons. It started with quite some delay last December. That was why the government struck a deal with PSMA. But it failed to have a smooth sailing as the government had expected. This has reference to allegations and counter-allegations from both sides on a number of contentious issues, including payments to growers, and massive use by some of the sugar mills of weigh-bridges, leading to tax evasion from unregistered buying of sugarcane.
This was stated to have been caused, among other things, by the failure of the government agencies to ensure against abuse of weigh-bridges during the whole crushing season.
It may be recalled that the government taking serious notice of unregistered buying of sugarcane in the previous season, had asked the Central Board of Revenue (CBR) to check the trend. But for whatever reasons, that approach proved of little avail. All in all, the developing situation on the sugar front will be seen as still fraught with grave dangers that can be averted only through a joint formula worked out by the government and the millers in the larger interest of the country's sugar economy.