The government may have to import 0.4 million tons of sugar this year to meet the shortage and stabilise prices in the country, market experts told Business Recorder here Wednesday. They said that the production of 2008-09 sugarcane crushing season is estimated at around 3.6 million tons, and even if we add the previous years left over stock to this years production, there would be a shortage of 0.4 million tons to 0.6 million tons in the production and demand this year.
Chief Co-ordinator, Farmers Association Pakistan, Dr Mohammad Tariq Bucha said that sugar mills are selling sugar at the rate of Rs42 to Rs45 per Kg presently. The price is likely to go up to Rs50 per Kg in a month or two, he apprehended. Dr Bucha who is a prominent agronomist refuted the sugar mills claim that they had to buy sugarcane at an exorbitant price between Rs110 and Rs180 per 40 Kg from far off areas due to scarcity of sugarcane in their regions this year.
"It had been manipulative behaviour of the sugar mills and their exploitation of the growers during the past four years that the latter opted to shift to other crops like rice than growing the sugarcane" he stressed. In a report on agriculture, the State Bank has said that sugarcane crop suffered because of gross disappointment of farmers in the preceding season.
"Not only the prices were lower than the anticipated prices (as per announced procurement prices), delays in the beginning of crushing season and payments also placed them at a disadvantageous position. As a result, for the FY09 cropping season, growers switched from sugarcane to other crops" "Consequently, area under sugarcane fell by 16 percent, which is also mirrored in the decline in its harvest during FY09."
The lower sugarcane production is expected to be reflected in a decline in sugar production (implying decline in LSM growth), import of sugar (implies pressures on trade deficit) as well as higher sugar prices (greater inflationary pressures). In view of all these dynamics, effective government intervention is required to resolve basic issues of price setting, commencement of the crushing season and early settlement of payments, the State Bank suggested.
However, the sugar mills management sources said that though there was 25 percent to 30 percent decrease in the acreage of sugarcane cultivation during 2008-09, yet the growers got the highest prices of their produce. "Since there was a competition among the sugar mills for the purchase of sugarcane to run their units, the growers got maximum price of their produce, which was paid in cash on the spot before loading in the commodity in trucks and trolleys", finance manager of a prominent mill said.
The sugar mills sources admitted that the sugar prices might be increased "nominally" in the coming months. It may be added that sugarcane is the second largest non-food crop after cotton and ranks fifth in respect of acreage. Prolonged drought and heat stress can decrease its production. There has been confrontation between growers and millers over price for several years.
Growers demand higher price for their raw material and millers complain about increase in production cost and imports. Other problems are stagnant cane yield, non-payment of dues to growers by mills, and low import parity prices.
A study revealed that farmers have decreased the total area under cane production due to water shortage, drought and shortage of water, behaviour of the mills management, late payments, increased input cost It is ironical that though 40 percent population lives below the poverty line, Pakistan ranks among the highest per capita consumer of sugar in the world.