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Sugar is an essential commodity in the consumption basket of all segments of society. Its production and distribution constitute one of the major sectors of Pakistan’s economy, with significant backward and forward linkages.

The sugarcane crop has a longer duration than the other cash crops in the country. It is important to note that the sugar sector accounts for 6% of the manufacturing sector and 13% of the agricultural economy.

The sugar sector provides direct employment to 1.5 million people, has a market value of US$1,812.717 million in 2020, and is expected to grow at a CAGR of 3.93% over the forecast period to reach a market size of US$2,374.593 million in 2027.

The development of the sugar sector in Pakistan reveals many twists and turns from its very beginning in 1948 to its present position in 2023. The current problems are the outcome of a combination of economic, technological, and political factors and a policy of interventions that has been primarily driven by short-term ad hoc considerations. Over time, the effects of these factors reinforced one another, effectively removing any potential for innovative competition and self-sustaining growth in the industry.

Despite having ideal agro-climatic conditions, an effective irrigation system, and being the fourth- or fifth-largest country in terms of the land used for sugarcane agriculture, Pakistan, far from being a regular exporter, has actually had to import sugar from time to time. In the process, significant economic injuries have been inflicted on both sugarcane growers and end-consumers.

Linking with the world sugar market, which is thinly traded; and it is comprised of surpluses that exporting countries seek to remove from domestic markets before they collapse prices at home. These exports are made possible by an array of subsidies and other governmental actions that have a tremendous impact on prices.

Brazil, for example, used $2.5 billion a year in subsidies and support for its sugar ethanol complex to grow an empire that controls half of the global sugar trade. With that kind of market dominance, every government action or planting decision sends prices sharply in one direction or another.

Contrarily, if we look at our situation, sugar exports cannot be profitable as long as sugar retail prices in Pakistan have been lower than international prices since 2013. Provinces are making financial commitments, and they can only be exported with a subsidy approved by the Economic Coordination Committee (ECC) or Trade Corporation of Pakistan (TCP).

Who profited from this disastrous policy throughout the years? Apparently, not the consumers who would have had access to cheap sugar if it had been imported for all these years, exports have only been possible with the help of export subsidies, a financial burden paid by taxpaying citizens, especially considering that this significant expenditure could have been used to raise crop yield and competitiveness.

Adding to this, the government should address the reservations faced by farmers and mill owners as well. Again, it’s a major challenge for the sugar industry to offload dues accumulated and paid to farmers over the years that create hindrances in cultivation and financial outlook as well.

On the other hand, millers argued that sugarcane productivity is around 54.6tonnes per acre, compared to as high as 120 tonnes per acre in Egypt. Pakistan is the only country in the world where sugarcane pricing is not based on recovery; cane with an 8 percent recovery is worth the same as cane with a 13 percent recovery.

An increase in cane yield and recovery through better cane varieties and good crop management practices is needed.

To stay competitive, profitable, and sustainable in the face of the changing global environment, innovation is crucial. The creation of novel disease-resistant sugar cane cultivars with excellent farm and factory yields requires ongoing study.

Sadly, neither public nor private organizations have been successful in establishing any top-notch research facilities in the nation, which could eventually make sugarcane farming and sugar processing competitive on a global scale.

The opportunities for the industry’s expansion through investment in technological advancement have also been overlooked as a result of price-fixing policies. The industry now has the status of a quasi rent-seeking enterprise where innovation has no place. As a result, the sector is now sensitive to global price movements.

The industry has adopted anti-competitive practices because of concerns about cheap overseas prices. The chances for expanding and diversifying the sugar sector have remained challenging as a result of the aforementioned discussion.

The entrepreneurial urge that develops and sustains an environment of fair competition through innovation has slowly evaporated.

This has been replaced by a mindset of collusive practices that have led to further inefficiencies in the industry’s gleam, already one of the lowest amongst major sugar producing countries in the world in terms of technological efficiency.

Copyright Business Recorder, 2023

Muhammad Sheroz Khan Lodhi

The writer is an economic analyst.

Email: [email protected]

Comments

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Tulukan Mairandi May 31, 2023 06:03am
Nothing that is sweet thrives and succeeds in Pakistan. Neither women nor the sugar industry.
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Urooj Ambreen May 31, 2023 01:48pm
>>Sugar is an essential commodity in the consumption basket of all segments of society. This right there is a lie. Sugar has no nutritional value and is not required for survival by anyone. Worse, feeding subsidized cheap sugar to Pakistanis has resulted in the highest diabetes rate in the world. The government should disincentivize growing sugar and cut off water to sugar farmers. The industry and the mafia attached to it, would whither away. We should be growing Palm trees (for oil), dates, corn and wheat, not this white poison.
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MaiKolachi May 31, 2023 03:24pm
The Doings of Shariffs, Zardaris and Tareens!
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Abdullah May 31, 2023 04:48pm
Stop consuming it for a week.There will be so much of it that they will have to export it and once people are done using sugar they wont go back to it as it destroys you.I say hike the sugar rate so people stop using it anf see the beneifts. I stopped using it 4 months back.only minimum level that too on special ocassions.Feel the bestbi could have more energy and i dont feel tired like i ise ti before. Cutt of the sugar
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Tulukkam Mairandi(Salem) May 31, 2023 07:57pm
Tell about the ELITE (RULING) CARTEL in Pakistan, who exploit Pakistani people at both situations, ie, while EXPORTING & IMPORTING as well.
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