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Sugar industry in Pakistan.

Pakistan's sugar industry is passing through an unprecedented tempo of growth. As of 1991-92 there were 53 sugar mills already operating in the country with a total installed TCD of about 172,200 which produced 2.33 million tonnes of sugar. With the advent of 1992-93 season so far five new sugar mills have come into operation u

Pakistan at present has 53 sugar mills with a cane crushing capacity of 180,000 tons per day (including beet adjusted to cane). These are capable of producing about 1,800,000 tons of sugar in a normal crushing season of 150 days and at average recovery of 8.5 per cent of cane. The act u al i production and availability of sugar is given below:-
Production of Refined Sugar

 No. of (000) (%)
Year Factories Production Increase

1982-83 36 1,129 --
1983-84 39 1,149 + 1.7
1984-85 39 1,305 + 13.5
1985-86 40 1,102 - 15.5
1986-87 41 1,256 + 13.9
1987-88 44 1,743 + 38.7
1988-89 45 1,850 + 6.1
1989-90 48 1,855 + -
1990-91 51 1,932 + 4.1
1991-92 53 2,300 + 19.0

Source: All Pakistan
Sugar Mills Association


Domestic production of sugar has attained a record level at 2,300 million tonnes during the year 1991-92. Average annual growth worked out to 10.7 per cent. Province-wise sugar production during 1990-91 was as follows:-

Sugar production in the country kept up its rising tempo, touching 229,698.1 metric tons during the fortnight ended July 15, 1992 as compared with 1,899,698.1 tons during the corresponding period last season. The higher output, according to knowledgeable sources, continued to be attributed to the fact that some more new mills have gone into production and along with existing ones functioning in full capacity, thanks to steady supply of sugarcane as a result of bumper crop this season. Obtained by crushing 24,821,976.0 tons sugarcane which gave an average recovery rate of 9.25 per cent, the present output set a new record as compared with 22,540,827.2 tons crushed during the fortnight ended July 1992 with average recovery rate of 8.42 per cent.

The province-wise production statistics released by the Pakistan Sugar Mills Association for the fortnight ended July 15, 1992 were as follows:-

TABULAR DATA OMITTED

Sindh: Sindh continued to be in the lead, with an output of 1,187,567.2 ton sugar, obtained by crushing 11,982,881.0 tons of cane which gave an average recovery rate of 9.90 per cent as compare, with 896,921.7 tons of sugar obtained through utilising 9,577,629.9 tons of can. with average recovery rate of 9.36 per cent during the corresponding period last season.

Punjab: Sugar production in Punjab during the period under report totalled 1,012,297.2 metric tons gained from 11,745,222.0 tons of cane which gave a average recovery rate of 8.61 per cent a compared with last season's corresponding an average recovery rate of 7.71 per cent.

N.W.F.P.: The NWFP produce 96,824.7 tons of sugar by crushing 1,093,873.4 tons of cane, attaining a average recovery rate of 8.85 per cent is compared with 72,806.0 tons sugar gained through crushing 911,171.6 tons cane which gave an average recovery of 7.89 percent during the corresponding period of last year. In addition, the NWFP also produced 28,934.0 tons of sugar and 314,758.0 tons of beat with an average recovery rate of 9.19 per cent as compared with 23,934.0 tons of sugar obtained from utilising 282, 102.7 tons of beat which gave an average recovery rate of 8.26 per cent.

Overall position of sugar production in the country was 2,296 metric tons at an average of recovery of 9.25 per cent from 24.821 million metric tons of sugarcane. During the last campaign, total sugar production was 1,743,000 metric tons and this year it is higher by 4.2 per cent. It will be seen that the sugar mills located in the Punjab gave a recovery ratio of only 8.61 per cent as compared to 9.90 in Sindh and 8.85 per cent in NWFP. Sugar mills in Sindh achieved high recovery ratio like Sindh Abadgar 9.90 per cent. Shahmurad 9.97 !per cent, Pangrio 9.60 per cent and Bawany 9.88 per cent.

The recovery ratio is also extremely low. The average recovery of sugar as worked out by UN for Pakistan stood at 9.6 per Cent in 1960. This average sharply declined to 8.68 per cent in 1982 as compared to 11 per cent in India. 15 per cent in Cuba, 14.3 per cent in Australia and in Hawaii in some cases it is as high as 18 percent.

The trend of sugar recovery during the last-decade commencing from 1973-74 to 1991-92 may be observed from the following table:-
Sugar Recovery Ratio

 Recovery
Year (%)

1973-74 7.74
1974-75 8.54
1975-76 8.10
1976-77 8.02
1977-78 8.74
1979-80 9.40
1980-81 8.82
1981-82 8.68
1982-83 8.87
1983-84 8.42
1984-85 8.89
1985-86 8.70
1986-87 8.65
1987-88 8.98
1988-89 8.68
1989-90 8.92
1990-91 8.44
1991-92 9.25

Source: All Pakistan Sugar Mills Association


Imports

There has been big jump in the demand of sugar in the last three years specially in the rural areas where it has risen sharply after sugar was decontrolled. The sugar production lagged far behind the demand of sugar and the Government had to allow imports on large scale.
Demand Supply Gaps

 Pro- Con-
 duc- sump-
Year tion tion Deficit

1984-85 1.306 1.500 186,000
1985-86 1.116 1.374 258,000
1986-87 1.286 2.036 750,000
1987-88 1.771 2.021 250,000
1988-89 1.858 1.901 43,380
1989-90 1.857 2.373 516,000
1990-91 1.934 2.138 204,000
1991-92 2.105 2.222 116,000

Source: FBS and APSMA


The annual consumption of sugar in the country is estimated at about 2.222 million tons. This estimate is based on imports and production. Serious objections have been raised on the indiscriminate import of sugar. It is feared that liberal policy of importing sugar will harm the private sugar industry and cripple the public sector sugar mills as most of those who are importing sugar from abroad own sugar mills. It has been suggested that raw sugar be imported at 34/35 dollars less price and the idle mills capacity should be used. China and India are already importing raw sugar to meet their requirements.
Imports of Sugar
(Code No. 0612002)

Quantity Value
Year (Tonnes) (Rs. million)

1985-86 257,93 7 928.360
1986-87 749,450 2,762.616
1987-88 250,109 954.143
1988-89 43,380 204.258
1989-90 515,964 3,751.844
1990-91 204,106 1,978.058
1991-92 116,564 913.077

Source: Federal Bureau of Statistics


Expansion

Pakistan's sugar industry is passing through an unprecedented tempo of growth. As of 1991-92 there were 53 sugar mills already operating in the country with a total installed TCD of about 172,200 which produced 2.33 million tonnes of sugar. With the advent of 1992-93 season so far five new sugar mills have come into operation up to the month of December 1992.

Out of another eight new units under erection at least three will go into production in the coming months bringing the total number of operational mills to at least 60 by the end of the current season and the overall installed capacity of 199,200 TCD. Besides, a number of existing sugar mills are working on the expansion programme of their existing capacities as well.

During the 1st year of the present decade two more units came into production namely Ramzan in Punjab and Chashma in NWFP. The later one i.e. Chashma is the first sugar project in Dera Ismail Khan, a new promising area. There are 23 more new projects in line with a total combined capacity of approximately 89,000 TCD, of which 14 are proposed to be located in the Punjab and nine in Sindh. Out of these 23 units 19 are expected to be on the around by 1994-95.

Total number of sugar mills operating in 1993-94 will be 66. By 1994-95 the number of sugar mills are expected to increase up to 72. In Punjab, out of about 14 new proposals on list so far five units have gone into production during the current year and two more may follow in the coming months. Another three or four units will be commissioned during 1993-94 whereas a couple of others will be still in line.

In Sindh province there are at least nine new proposed sugar units at various stages, of which one project is likely to be commissioned during the current season and other five are expected to be commissioned during 1993-94 and 1994-95 crushing season 1993-94 and a couple of more to follow. Some of the existing sugar mills are actively working on the expansion of their present capacities. The total addition in the capacities through BMR and expansion would be equivalent to five new sugar mills.

The place which have been identified for the setting up of new sugar mills in Sindh by Sindh Chamber of Agriculture are: Mori Manager, Taluka Hyderabad, Sinjar Chang Taluka Tando Allahyar, Hala, Khathar of Hyderabad District, Samaro of Tharparkar District, Golarchi, Kadhan and Tando Ghulam Ali of Badin District, Marli, Naushero Feroz and Shahdadpur of Sanghar District, Shah Atiq and Jati of Thatta District.

In order to meet the additional requirement of sugar, further expansion of the sugar industry is considered inescapable. It is, however. a source of satisfaction that more than 70 per cent sugar mills machinery and equipment is being manufactured locally which would be of immense help during the expansion of sugar mills.

The establishment of a new sugar mill of 2000 tonnes cane per day would cost approximately Rs. 350-400 million whereas an expansion programme of existing unit by the same ratio will only require 25 per cent of this cost which is a far more economical proposition. Therefore, it is advisable that main emphasis be laid on the extension of existing units.

In order to encourage the expansion programme, certain measures like liberal financing, exemption of taxes on import of machinery, as in the case of textile and milk industry, may be considered by the Government. Another important point would be establishment of a sugar estate that is sugar mill with own cane farm in Balochistan province as is being done in other countries. It can help the area to produce their own sugar thereby attaining self-sufficiency.

The Government has recently formulated a policy allowing establishment of industry including sugar mills without any restriction up to an investment of 0.7 billion rupees, which is quite an encouraging step for the development of industry. But the most important aspect of establishing a sugar factory is the selection of area. If the sugar mills are concentrated in specific areas without any demarcated sphere it may hamper the developmental activities of the area, affect the normal working of the newly established sugar mills. It would be better if the area for establishing new sugar mills are specified.

TABULAR DATA OMITTED
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Publication:Economic Review
Article Type:Industry Overview
Date:Sep 1, 1993
Words:1930
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