ANALYSIS OF PAKISTAN INDUSTRIES
SUGAR INDUSTRY OF PAKISTAN
GROUP MEMBERS AND TOPIC DISTRIBUTION
• Sobia Rizvi History of Sugar Industry
Pakistan Sugar Industry
International Sugar Market
• Marium Sultan Pakistan performance in international sugar market
• Mehreen Tanveer Production Policy
HISTORY OF SUGAR INDUSTRY
• At the time of independence in 1947, there were only two sugar factories in
• The output of these factories was not sufficient.
• The country started to import sugar from other countries and huge foreign
exchange was spent on this item.
• Government setup a commission in 1957 to frame a scheme for the development of
• The first sugar mill was established at Tando Muhammad Khan in Sindh province in the
• Then during 1997-98 there were 75 sugar mills in the country producing 2.4 million metric
tons of sugar.
• The sugar sector constitutes 4.2% of manufacturing
SUGAR INDUSTRY IN PAKISTAN
• Sugarcane is an important cash crop of Pakistan
• It is an important source of income and employment for the farming community of
• Its share in value added in agriculture and GDP 3.6 and 0.8 respectively.
• In addition to sugar, sugarcane is employed in the production of a number of other
products such as: alcohol used by the pharmaceutical sector, ethanol for fuel, chip
board manufacturing and press mud used as nutrients for crop production.
• There are 84 functional sugar mills in the country
• The sugar industry is the second largest agro-based industry.
• The total sugar production capacity is 6.8 million tons in a season and about six
hundred thousand (600,000) tons per day.
• Pakistan is the fifth largest sugar cane producer in the world.
• Ranks 15th among refined sugar producers
• Approximately more than 2.5 million people are involved in harvesting sugar
cane while more than a hundred thousand are involved directly or indirectly in
• Internal disputes between Pakistan’s sugar growers and processors also plague
SUGAR CANE PRODUCTION
• Over the past fifty years, especially, the international trade in sugar has changed
• Sugar has become an integral component of the economic relationships among
SUGAR PRODUCING COUNTRIES
• Sugar is mainly produced from two sources – Sugarcane and Beet
• The major cane sugar producing countries are countries with warm climates, such
as Brazil, India, China and Australia
• The greatest quantity of sugar is produced in Latin America, the United States and
the Caribbean nations, and in the Far East.
• The sugar beet regions are in cooler climates: North West and Eastern
Europe, Northern Japan, plus some areas in the United States including
INTERNATIONAL SUGAR MARKET
• There are More than 100 countries which produce sugar around the world either
from sugar beet or sugar cane.
• Generally, the costs of producing sugar from sugar cane are lower than those in
respect of processing sugar beets.
• The five largest exporters in 2009/10, Brazil, Thailand, Australia, EU and SADC
(South African developing community).
PRODUCTION & CONSUMPTION:
Currently, 71% of the world’s sugar is consumed in the countries of origin, while the
balance is traded on world markets.
WORLD SUGAR PRICES:
•Sugar prices reached its 30 years highest price in world market of US$30.64 cents
per pound of sugar in October 2010.
•Because of rise in raw sugar prices, India, one of the world’s largest producer of
sugar, is considering restricting exports.
PAKISTAN STAND IN INTERNATIONAL SUGAR MARKET
• SUGAR CONSUMPTION
• An increasing trend for the last 15 years. It has increased from 2.89 million tons
in 1995-96 to 3.95 million tons in 2005 06.
• Biggest consumers of sugar in South Asia with 25.83 kg per capita consumption per
year, whereas in India it is 14 kg, Bangladesh 10 kg and China 11 kg.
• PER CAPITA CONSUMPTION IN PAKISTAN
• Consuming 25 kilograms of sugar per person in a year, the highest in the region, Asia
• The sugar mills in the country produced more than 3.6 million tons of sugar during 2008-
09 crushing season.
• YIELD PER HECTARE
• Is amongst the lowest in world.
• Average yield of sugarcane in the world is around 65 metric tons per hectare
• China 77.1, India 70.6, Philippines 92.6, Thailand 92.6, Australia 75.5, Egypt 105
tons and Pakistan only 46.0 per hectare.
• Farms tend to apply few inputs such as fertilizer and pesticides
• Water Shortage
• Planting may be delayed by crop rotation considerations, canal closure, or lack of
suitable implements to prepare the soil properly.
• Long periods between harvest and the time cane is crushed.
• Outbreak of disease and pest attacks
CURRENT RISE IN PRICES OF SUGAR
YEAR RUPEES IN % CHANGE
2004-2005 5229 266.7
2005-2006 37,366 614.60
2006-2007 15,722 (57.59)
2007-2008 912 (94.20)
2008-2009 4.505 393.96
2009-2010 1,551 (65.57)
2010-2011 11,707 (654.80)
• According to one newspaper article, on June 9th, 2011,
• Pakistan Sugar Mills Association (PSMA) said “it has not increased the price of the
commodity, as the industry has no role in dictating prices. Price is a direct outcome of
demand and supply system in free market mechanism”.
• He said the carrying cost of sugar per month is one rupee per kg because of increased
mark-up rates. Any sugar produced in January and sold in June would mean an
additional cost of 6 rupees per kg. According to him, the sugar industry ended up buying
sugarcane at about Rs 196 per 40 kg.
• Now ,after the budget, the sales tax has been replaced by excise duty. There was very
slow buying of sugar before the announcement of budget as the market was waiting for
the budget proposals and their implications and now the buying has started in bulk which
has led to price adjustment through market forces.
SUGAR IMPORTS IN PAKISTAN
FY 2009/10 sugar imports were forecasted at 730,000 MT, and FY 2008/09
sugar imports estimated at 700,000 MT.
•According to one newspaper article – 3rd Feb 2011:
• Pakistan is unlikely to import sugar this year because the country will have enough
stocks to meet domestic requirements, Food Minister Nazar Muhammad Gondal.
• “We will be self-sufficient in sugar and I am very confident that we will not need to
import sugar this year,” Gondal told reporters
• Pakistan imposes no import duty on white sugar and the government in September
waived a 25 per cent duty on raw sugar to encourage the private sector to import
• Gondal said that initial estimates suggest the crop would produce about 3.5 million
tonnes of refined sugar and that, together with the previous stocks of 0.9 million
tonnes, should be enough to meet the country’s needs.
• Pakistan is amongst the most low cost sugar producing countries.
Source: economic survey Pakistan 2009-10)
• During last 5 years, capital expenditure increased significantly on account of
expansion undertaken by some sugar mills .
• During FY05-FY08 significant FDI was also observed, and increased .
• Long term debt in the industry increased with the increase in capital expenditure
during the period 1990-2009.
• The Federal government generally does not procure sugarcane, but it authorizes
provincial governments to fix respective sugarcane prices.
• To assist sugar processors in the economic downturn, MINFA and the Ministry of
Industries and Production found ways of making sugar operations run more
• The MINFA and the PSMA have initiated a sugar crop development project utilizing
• In addition, the sugar industry is reluctant to promote sugar beet cultivation
because the amount of time needed to process beets into sugar.
• In order to promote this initiative, the GOP is considering tax holidays for
companies that process sugar beets.
• Pakistan’s sugar industry continued to deal with uncertainty in CY 2009 due to
decreasing sugar production and a lack of coordinated government policy.
• Despite the ECC’s February 2009 decision to import 200,000 metric tons of sugar,
the TCP was still unable to arrange timely imports.
• As a result of the government’s inability to deal with the supply situation, the
Pakistan Supreme Court intervened to stabilize sugar prices.
• Sugar prices have been on the rise since May 2008 and reached record levels in
• The future stability of retail prices will depend upon timely imports and prevailing
prices in the international market.
• Since 2000 the economy sees that the sugar sector is troubled.
• Prices seem to be on a constant rise while the quantity of supply keeps on fluctuating,
often causing shortages.
• Reasons for this fall under two broad categories:
1. Artificial reasons
2. Natural reasons
• The governmental policies and acts are self contradictory which cause the frequent
shortage in supply and increased prices.
• Several political figures own majority of the sugar mills and therefore they control
how it is passed on to the middle men.
• Hoarding is a big problem. The mill owners and large suppliers often hold large
quantities and create an artificial shortfall. Then they set high prices for its release.
• Government increased the sales tax from 3.50 % - 4%. As a consequence of the
increase in sugarcane price as well as the sales tax, the overall production cost has
been increased a lot.
• While on the other hand, the import of sugar from India at relatively low price is
posing a serious threat to the survival of the local sugar industry.
• Besides importing 500,000 tons of raw sugar, the government has allowed import of
200,000 tons of refined sugar from India without ascertaining the exact volume of
the local production.
• Before the crisis, sugar was being sold at a price of Rs18 per kg (in 2001) which
shot up to Rs30 per kg in the same year.
• To avoid recurrence of such crisis, the Sindh government ensured a direct supply of
sugarcane to the sugar mills from the growers.
AFTER FLOOD SCENARIO
SUGARCANE CROP DAMAGED
• The sugar crop was expected to produce about 3.8 million tons of white sugar before the
• After the flood, the food ministry estimated the output at about 3 million tons against an
annual demand of 4.2 million tons.
• The government of Pakistan considered a tax holiday for companies that process sugar
• The government waived a 25 percent regulatory duty and allowed millers and traders to
import as much raw sugar as they want. The state-run TCP will have no role in raw sugar
1. Increase Sugarcane yield per area
•Our sugar yield i.e. cane yield x sugar recovery %cane is less than half of the
developed cane growing in countries of the world.
• The goal of increasing sugar yield per unit area is difficult, time consuming and needs
dedicated efforts of government, millers and the growers.
•Measures to improve cane productivity include:
• selection of the right varieties, maintenance of soil health, quality planting
material, nutrient management, weed management, water management, and
sound post harvest handling.
2. Educating the Grower
• In Pakistan most of the growers don’t know the proper method or procedure of
• It is recommended that there should be organizations who should guide the growers
to increase their production.
3. Improvement in Technology:
•There is lack of research in Sugarcane technology and the industry is more labor intensive
•Sugarcane is a deep-rooted crop; proper land preparation plays a vital role in development
of cane root system. Land should be prepared by deep ploughing at least after every two
•It is very important that well-rotten farmyard manure (FYM) should be applied a month prior
to land preparation. Press mud from the sugar industry is another excellent source of
organic matter and nutrients.
•Soil in the prepared field should be friable and well worked so that full germination takes
place and later on plants grow without any inhibiting barriers.
4. Seed Rate and Planting Pattern
•Appropriate seed rate and spacing are often ignored by farmers, with the result that the
optimum plant population, which is the key factor in sugarcane production, is not achieved
in the field.
•The seed rate and spacing between rows differ with variety. A spacing of 1 m between the
rows of thick cane varieties, and 0.60-0.75 m for thin to medium cane varieties allows
sufficient space for operations like intercultural and earthing up.
5. Lenient Credit Policies
•The sugar industry needs to grow and it will require a lot of finance from the banks.
Pakistani banks have the highest bank spread in the world.
•The SBP should direct all commercial banks to finance working capital requirement of
operating sugar mills in every season through proper and vigilant loaning methods.