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Presented To:
Prof. Kanwal Zahra
Group Members:
L1f09mbam2083
Due Date:
November29, 2010
Introduction:
Pakistan is the 5th largest country in the world in terms of area under
sugar cane cultivation, 11th by production and 60th in; yield. Sugarcane
is the primary raw material for the production of sugar. Since
independence, the area under cultivation has increased more rapidly than
any other major crop. It is one of the major cash crops in Pakistan
cultivated over an area of around one million hectares.
The sugar industry in Pakistan is the 2nd largest agro based industry
comprising 81 sugar mills with annual crushing capacity of over 6.1
million tones. Sugarcane farming and sugar manufacturing contribute
significantly to the national exchequer in the form of various taxes and
levies. Sugar manufacturing and its by-products have contributed
significantly towards the foreign exchange resources through import
substitution.
SUGARCANE
Production:
Pakistan has the 5th largest sugarcane growing area in the world and is
the 15th biggest global producer of sugar. Sugarcane is grown on around
a million hectares and provides the raw material for Pakistan’s 84 sugar
mills. The sugar industry is the country’s second largest agro-industry
after textiles. Besides its edible use, Pakistan also uses sugar to produce
alcohol for medicinal purposes, ethanol for fuel, chip board
manufacturing, etc.
In 2009/10, (Oct/Sept) Pakistan’s sugarcane production is estimated at
47.8 MMT, down 2.2 million tons from last year’s estimate. The decrease
in sugarcane area and lower production during the last couple of years
are attributed to the non-transparent government sugar policies,
significant increase in minimum support prices for competing crops (e.g.
wheat and rice), dwindling water resources, and higher input costs.
Consumption:
The 2010/11 sugar consumption is forecast at 4.28 MMT. Consumption estimates
for MY 2009/10 is lowered to 4.2 million tons, 50,000 tons less than the earlier
estimates due to relatively tight domestic supplies and higher prices.
Although limited sugar supplies and the steady increase in prices have affected
household sugar consumption, overall sugar consumption remains the same due
to growing demand by the processed food sector (soft drinks, fruit drinks, dairy,
confectionary, traditional sweets etc). Bulk consumers such as bakeries, makers
of candy and local sweets, and soft drink manufacturers account for about 60
percent of the total sugar demand.
Trade:
In 2010/11 sugar
imports are forecast
at 700,000 MT, and
MY 2009/10 sugar
imports are
estimated at
1,030,000 MT. On
January 2010, the
ECC decided to
import 1.25 million
tons of refined sugar
from the
international market.
Accordingly, the GOP
authorized the TCP to import 500,000 MT for government stocks and the
remaining 750,000 MT for the private sector before June 2010.
The ECC also decided that the private sector import would be exempted
from sales taxes and other duties to ensure that landing cost of imported
sugar will range around Rs.50 per Kg and retail price at Rs.55. The ECC
also decided to scrap the 16 percent General Sales Tax (GST) in order to
stem the rise of sugar prices.
Stocks:
No. of Mills 81
The government had earlier expected up to 3.2 million tonnes of sugar from the
crop, after the country's worst floods washed away nearly 10.5 million tonnes of
sugarcane.
But after recent surveys of the flood-hit areas in the main sugar-growing
provinces of Punjab and Sindh, government and industry officials told a meeting
on Thursday that yield would be higher in areas where there were rains but no
floods.
"Our estimate is that we should be able to produce about 3.7 million tonnes of
sugar from the crop."
Some of the sugar mills in Pakistan:
Recommendations:
The sugar industry must spearhead the research and development efforts
so as to meet its raw material requirements and to control the prices of
sugar which increases continuously The specific recommendations are:
1. The marketing of the produce, raw material as well as end product, has
emerged a key issue requiring serious attention of the government. The
market imperfections must be removed through marketing efficiency and
institutionalization of market intelligence.
References:
[1] APCom (Agricultural Prices Commission).2002. “Support Price Policy”.
Reports on Sugar
cane. Agricultural Prices Commission, Islamabad.
[2] APCom (Agricultural Prices Commission). 2003. “Support Price Policy”.
Reports on Sugar
cane, Agricultural Prices Commission, Islamabad.
[3] Alpine, R.W.L. and J.Pickett.1993.”Agricultur, Liberalization and
Economic Growth in Ghana
and Cote D’ivoire, 1960-1990. OECD Development Center, Paris
[4] Appleyard, D. R. 1987. “Report On Comparative Advantage”.
Agricultural Prices Commission
(APCom series No.61) Islamabad
[5] Chishti, A.F. and W. Malik. 2001. “WTO’s Trade Liberalization,
Agriculture Growth and
Poverty Alleviation in Pakistan”. The Pakistan Development Review 40:4
part II 1035-1052
[6] Food and Agriculture Organization of United Nations 1997. “The
impact of trade liberalization
on production of agricultural commodities and related fertilizer use to
2000.”