The market sources, sugar experts and technologists, and farmers circles have expressed the fear that sugar crisis may aggravate further in case government allows import of sugar to deal with any delay in the forthcoming crushing season.
It may be noted that a section of press quoted the government sources hinting at government's intention to allow sugar import if sugar industry delays in starting forthcoming crushing season.
The reports also mentioned that the federal government might also consider activating the Sugar Factories Control Act and instruct the provincial governments to persuade the sugar mills to start crushing in October. The imported sugar would reach the Karachi port at Rs 23/kg with an addition of 15 percent sales tax that would enhance the market price at Rs 24 per kg, added the report.
According to market sources, if the sales tax is excluded from sugar, the price of the commodity would range between Rs 23 and Rs 24 per kg, similar to the local market, as per kg deduction of sales tax is Rs 3.60. The sources claimed that Indian lobby is actively manipulating with certain officials of the government of Pakistan to dump Indian sugar in the country to get rid of their surplus stocks of sugar.
The Indian government is doling out freight subsidy and other incentives to its industry to facilitate it dumping the surplus stocks of sugar, as it is becoming difficult for Indian government to export sugar.
The sugar technologists pointed out that nowhere sugar industry in the world can afford delay in crushing, but how the industry can start crushing when it is facing huge losses due to unnecessary interventions by the government.
They said economic viability of the industry is must for early start of crushing season and it can only be achieved if the government stabilises the market at the already calculated and agreed cost which was worked out between both sides.
This stabilisation could be ensured through the Trading Corporation of Pakistan (TCP) mechanism so that prices of sugar do not go beyond Rs 31 and mills do not enter into further losses, which would be third year in a row, they pointed out.
Instead of considering positive steps to bail out the sugarcane growers and sugar industry, the government has started considering steps which could threaten the industry and growers viability and survival that would aggravate the crisis, especially at such a crucial stage when country is entering the election year, they added.
Regarding activation of the Sugar Factories Control Act, the market sources mentioned that it is yet to be seen how much the Sugar Factories Control Act would be effective under the present free market economy regime.
According to them, the Sugar Factories Control Act has become redundant and obsolete, as the Act dates back to the times when the sugar was used to be purchased by the government and sold to consumers on rationing quota system at a fixed price after including margin to cover the cost of production.
At that time, they said, sugarcane was purchased through zoning system and the government was supposed to fix minimum support price of sugarcane. The question of high sugarcane and sugar prices was immaterial in that regime as both sides were controlled by the government and sugar industry used to get its share of processing cost.
The sugarcane grower circles are of the view that import of sugar would not solve their problems and any kind of delay in crushing would affect more than one million population of the country linked directly or indirectly with the industry. Moreover, 160,000 families would be rendered jobless and country would be burdened with import of sugar worth 100 billion rupees in foreign exchange, they added.
Meanwhile, sources in the sugar industry said the PSMA delegation, headed by Shunaid Qureshi, its central chairman, had indicated its last meeting as positive with the federal government in the Ministry of Food, Agriculture and Livestock, saying the situation came to an understanding when the government side agreed to ensure credibility on the commitment of its earliest ex-mill sugar prices at Rs 31 per kg.
According to industry sources, the crisis would aggravate further if government imports sugar to the tune of four million tonnes, as the industry is also likely to produce 0.45 million tones which would result into surplus stocks of 0.5 million tonnes. Therefore, this huge oversupply situation due to the surplus import of sugar by the TCP will continue for several years, especially when the world sugar market is also experiencing oversupply situation in general.
Sources said India is in difficult situation as it finds it difficult in exporting sugar; first, because of surplus situation in the world market, and secondly, because of its inferior quality sugar having higher sulphur content, which is known to be injurious to health.