12-11-2012, 04:39 PM
SUGAR INDUSTRY IN PAKISTAN Problems, Potentials
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SYNOPSIS
The industry employs more than 100,000 labour force while more than 9 million people
of rural population are involved in the production of sugarcane. The existing mills are
sufficient enough to produce the countrys requirement of sugar until the next three
years. DFIs should not entertain any application from whosoever politician or otherwise
for setting up a new sugar mill in the country. Rather they should concentrate for
financing of minimum working capital requirement of 67 operating mills, who are in dire
need of such finance. An approximate amount of Rs. 2.7 billion will have to be
earmarked by the commercial banks to finance for working capital requirement of these
alive units.
Unfortunately, Pakistans sugar industry is mostly owned by political personalities and
majority of the sugar mills were setup with the help of DFIs normally trapped with the
working capital crisis. Consequently, some of the mills have already been closed and it
is feared that some more sick units will also close down. A collapse of sugar mill is a
loss of national assets, reduction in the sales tax revenue and an increase in
unemployment.
Loss of production of refined sugar due to excess quantity of raw cane diverted for seed
and Gur manufacturing (37% instead of 25%) works out to 482,269 tons that could have
made available possible a total sugar production of 2,911,633 tons both from cane and
beet. Under such avoidable circumstances, the country could have needed to import only
about 113,587 tons, which might result to save precious foreign exchange of
approximately $ 208.830 million. Advance planning to foresee the situation for the
previous year and control of proper utilization of cultivated sugarcane could have easily
avoided the current sugar bonanza.
The Government should take up cost studies at the growing sugarcane stage for the
purpose of fixing the support price for the growers. Cost studies for production of
refined sugar both in terms of variable cost and fixed cost of production in each sugar
mill, should also be undertaken to control the retail prices. Cost audit rules and
compulsory maintenance of cost accounting records for sugar industry, in line with the
international cost accounting models in other countries of the world, will prove to be a
great help in this direction.
The net amount of foreign exchange amounting to Rs. 7.509 billion saved as a result of
total exports of Rs. 19.772 billion during the last six years from 1994 to 1999 has been
eaten away by the import of 900,000 tons during the current year 1999-2000 estimated to
cost Rs.13.509 billion to the government exchequer.
INTRODUCTION:
Sugar Industry is an agro-based industry, which provides employment to the landless
rural population and has a great impact on the economy of the country.
The three principal bye-products of a sugar industry are bagasses, molasses and press
cake which along constitute about 40 per cent of the weight of the total cane crushed.
Proper and economic utilization of these bye-products can reduce the cost of production
of sugar to some extent. Bagasse is a source of energy fuel for sugar industry which is
used to fire boilers for juice heating. Bagasse is also being used for making Medium
Density Fibre Board (MDFB) at some industries which is a substitute for natural wood.
In Pakistan, utilization of sugar bye-products has not received much attention as
compared to other countries of the world.
Average yield of sugarcane in the world is around 60 tons per hectare while in Pakistan,
it has been worked out to 43.86 tons per hectare. India with almost similar soil and
climatic conditions had achieved about 61% higher yield for the year 1996-97. Within
Pakistan even, there exists a large gap between yield obtained at the farmers fields and
those obtained on experimental stations. There is, therefore, still a great scope to achieve
much higher yield at the common farm level in Pakistan. In Sudan a north African
country yield per hectare is 78 tons while it is 115 tons per hectare in South African
country - Zambia.
Two types of process are generally used in sugar factories. (1) Defecation remelt
carbonation (DRC); (2) Defecation remelt carbonation and sulphitation (DRCs). These
two are clarification process.
Sugar Mills Capacity
In Pakistan 76 Sugar Mills are operating having crushing capacity of 361,300 tons of
cane per day (TCD). Seven Sugar mills extended capacity but they are unable to utilize.
Based on 160 days season these sugar mills have a total crushing capacity of 58 million
tons of sugarcane capable to produce 5 million tons of refined sugar and 3 million tons of
molasses.
In order to enable the country to be self-sufficient in sugar, a minimum area of 1.150
million hectares should remain under sugarcane cultivation, which can produce 50
million tons at an average yield of 43.86 tons per hectare. The Government should
insure that at least 76% of the sugarcane grown in the country is utilized by all sugar
mills. It means that a total of 38.3 million tons if compulsorily utilized by the mills can
easily produce white refined sugar of 3.3 million tons per season at an average sucrose
recovery of 8.62%. Pakistan present population is 13.5 million head count. With an
average growth rate of 2.5% per annum, the population of the country will grow year to
year as shown in graph and table I. The per capita consumption of sugar in Pakistan is
about 22 kg. The estimated domestic consumption is provided in table I and graph IA.
Keeping in mind the balance production of agricultural sector and peculiar problems the
sugar industry face due to being its status of political industry, and its seasonal nature the
minimum production of 3.3 million tons per season will be sufficient enough to meet not
only the domestic demand but also make surplus sugar available during the next three
years as shown in the table.
Sugarcane Production Yield and Sucrose Recovery
From Table II, it is obvious that sucrose recovery plays a critical role in increasing sugar
production. The Government may take necessary steps to insure that the cane growers
use improved varieties of sugarcane possessing high sucrose contents and resistance to
disease and pests and our research institutes evolve high sucrose content varieties of
sugarcane. Each mill should have vigilant cane department, which should see that fresh
cane supplies from the fields are brought to the mills on the very same day these are cut
by the farmers. They should be advised to transport their cane to the mills as soon as
possible to avoid losses of weight and of sucrose content.
Improved yield per hectare is a dominant factor augmenting the sugarcane production
and increasing the income of growers. Area under cane cultivation, production and per
hectare yield for the past fifteen years are shown in Table II.
From table II, it is observed that the area, production and yield per hectare of sugarcane
have reasonably improved. Lower productivity in Pakistan is due to insufficient
irrigation water, inadequate input of fertilizer, and also lack of proper spraying of
insecticides and pesticides.