Sugarcane is an important cash crop of Pakistan. It is grown on a large area of the country, and provides raw material to the large number of sugar mills that have been established in the country over the years. Also, some portion of the sugarcane crop is used for the production of gur (jaggery), especially in Khyber Pakhtunkhwa. The sugar industry in the country is the second largest agriculture-based industry after textile.
The sugarcane crop has a longer duration than the other cash crops in the country. Farmers require great skill and huge investment to cultivate the crop, and face a host of problems, including the increasing cost of inputs and labour as well as scarcity of water.
Even after bearing all this, at the end of the day, the growers remain at the mercy of the sugar mills and are unable to get a fair price for their produce. The interests of the millers are secured in every crisis, whether caused by shortage or due to glut of sugar supply in the market. Either way, the millers are the beneficiaries and get concessions from the government of the time to keep their profit margins intact.
The Pakistan Sugar Mills Association (PSMA) serves as a strong lobby and safeguards the interests of the industry. On the other hand, farmers’ concerns are largely neglected, and the growers are squeezed in the marketplace. The main beneficiaries of any price increase are always the millers or the processors. The farmers remain stuck on the lowest rung of the value chain.
It merits a mention that the sugar industry comprises six per cent of the manufacturing sector and 13pc of the crop economy. The sugar sector provides direct employment to one million people and has a market size of Rs501 billion as of 2021. The government has continuously increased the support price on sugarcane from Rs126 per 40kg in 2011 to Rs300 per 40kg in 2022 to incentivise the farmers to increase sugarcane production. Since 2011, the sugarcane production in the country has shown a cumulative growth of 36pc compared to a 42pc growth in the demand of the commodity.
Also, sugarcane cultivation as a percentage of the total cropped area increased from 4.3pc in 2011 to 5pc in 2021. However, the total cropped area in the country has remained stagnant for the last four years, while the sugarcane cultivation area has declined recently.
The sugarcane farmers face delays in payments and low income due to the seriously low price paid by the mills compared to the support price announced by the government. I am sure the mill-owners would have their own litany of woes, and they must be heard by those concerned as well.
The entire spectrum of issues related to the sugar industry calls for a redesigning of the structure of the sugar market, and contemporary policies to remove the underlying bottlenecks by outlining necessary reforms.
The sugar sector needs a comprehensive and rather urgent transformation at all stages whereby the price control, import and export restrictions as well as interventions by the government should be done away with once and for all.