The Ministry of Industries on Friday clarified that there is no sugar shortage in the country and the current stocks would last till December this year. Analysts say that the ministry has made the statement in anticipation of sugar price hike right before Ramadan.
A statement issued by the ministry said that there was no evidence of large scale smuggling to Afghanistan, as mentioned in a section of press. As per report of International Sugar Organization, sugar consumption in Afghanistan stands at 235,000 tonness per year. Afghanistan imports its sugar from India, China and Brazil and even in the event of sugar being smuggled to Afghanistan it is not significant enough to have impact on the sugar stocks.
The ministry said that the provincial governments have been asked to check hoarding and profiteering while the Ministry of Interior has been asked to check smuggling from the western borders.
The ministry clarified that demand and supply of sugar was in equilibrium. Sufficient stocks of sugar are available in the country and there is no shortage of sugar. The demand of sugar is price elastic that is, demand decreases with the increase in price and vice versa. The trend analysis show that average sugar consumption in Pakistan for the last three years is around 3.8 million tonens per annum, while strategic reserves of 0.5 million tonness are kept in accordance with National Sugar Policy 2009-10, thus aggregating the requirement to 4.3 million tonesns annually.
The sugar stocks with TCP stand at 0.305 million tonnes, whereas, sugar production for the year 2010-11 stands at 4.17 million tonnes, based on reports of TCP and provincial cane commissioners. Furthermore, total 1.83 million tonnes of sugar is in stock which is sufficient till December 25, 2011.
Pakistan sugar production in the year 2010/11 has been approximately 4 million tones. According to official statistics, Pakistan grows 1 million hectares of sugar cane, with a country standing of six in major sugar cane producing states. Cane is also used for the production of non-centrifugal sugar and seed, with the average land harvested for centrifugal sugar standing at around two thirds of total farm land allocated for sugar cane.
Pakistan’s milling capacity is in excess of 5 million tonnes however the sector operates at approximately 60 to 70 per cent of total capacity. This is mainly due to the fact that mills face sufficient difficulty acquiring non-centrifugal sugar.
In the last ten years, sugar consumption in Pakistan has increased phenomenally growing at an average of 110,000 tonnes on a yearly basis. It is estimated that per capita sugar consumption of Pakistan is 22 kgs compared to India’s per capita consumption of 15 kgs.
Despite the government attempting to influence the rate of sugar in the market, mill owners continue to sell sugar at rates above the market rate set by authorities. Self sufficiency for Pakistan in terms of sugar can be achieved if sugar mills operate at full capacity and there are no hurdles faced in the supply of non-centrifugal sugar. The government needs to take steps to increase the per acre yield of sugar cane, however increasing farmland for sugar cane production could be done at the cost of foregoing the production of other crops which might not be feasible to the economy.
