ISLAMABAD : Dec 24, 2022: Short- sighted and politically motivated decisions of the Pakistan Muslim League Nawaz (PMLN) led Pakistan Democratic Moment (PDM) government has set a stage where sugar industry of Pakistan is going to become bankrupt and subsequently collapse in toto.
Indecisiveness in export of surplus sugar is a key factor that has pushed sugar industry in muddy waters.
Over the years , Pakistan hardly has anything surplus to export and earn much-needed foreign exchange and as a result Pakistan’s exports are stagnant for years . In such an environment , sugar industry performed exceptionally well in 2021-22 crushing season and not only met around 6.million tons local demand of sugar, but also produced 1.,5 million tons surplus sugar . Like other commodities , sugar demand remained on higher side in 2022 and it pushed -up commodity rates all time high to $ 700 per ton in international market.
Since in the first half of the outgoing calender year , sugar rates were as high as $ 700 per ton in the global market and Pakistan had substantial surplus stocks of sugar only a timely decision for its export could have helped Pakistan earn around $ 700 million foreign exchange .
Pakistan Sugar Mills Association (PSMA) vice chairman, Iskander Khan, when approached for his comments on the issue said” We had proposed to the government in June 2022 to allow the industry export.of surplus one million tons of sugar and it was a good time as the international market was bullish and timely decision could have fetched around $ 700 million to help Pakistan build -up receding forex reserves’, but he added ” Unfortunately the government denied permission for export of surplus sugar”.
He said India took advantage of the situation and exported 6 million tons sugar and earned billions of dollars but here in Pakistan the government simply lost the opportunity.
Iskander Khan’s arguments make one think how the decision-makers prefer politics over national interest.
Shahbaz Sharif , who hails from an industrialist family , should have taken timely decision to export surplus sugar. His timely decision in this case could have saved interest of the state and all stakeholders of the sugar sector.
Shahbaz Sharif and his cabinet could not dare to stand for a clear- cut case of the national interest, fearing permission to export sugar may backfire and its main political opponent , Imran Khan , may use it to further ditch his government.
This mental approach of the decision -makers resulted in missing of a good opportunity to earn handsome foreign exchange for the country at a time when each dollar matters for it. Indecisiveness of the decision makers has created a severe crisis for all sugar sector stakeholders including the industry and growers .
The Punjab government has fixed Rs 300 per maund price for sugarcane for the current crushing season and it is not a bad decision . The growers deserve good price of their produce , but how the industry will survive if it buys sugarcane at the fixed rate , but sugar price remains much less than its production cost?. Another problem linked to the matter is that the banks will not approve working capital for the industry if they fear loss to the industry at the end of the sugar season?. Third related question one should ask from the prime minister and his National Food Security minister, Tahir Bashir Cheema, who will pick up loss incurring to the industry if current equation of higher cost of sugar production and lowering ex-factory price continues?.
Honourable prime minister and his minister for National Food Security should understand that all stakeholders of sugar sector were interconnected and the government which gets hundred of billions in taxes from the industry is a major stakeholder. If the industry loses, none of other sugar sector stakeholders will gain. The only solution to this problem could have timely decision for export of one million tons of sugar . It would have helped improve market sentiments to take sugar.price locally to a reasonable level and help the industry make fixed price of the produce to the growers who work for one full year for sugarcane crop with a hope that its harvesting will bring them income to bear expense of a full year. Those who took a decision of permitting only 0.1 million tons of sugar and that too with a string that the PSMA will ensure that the commodity price will not exceed to Rs 90 a kg actually set a stage for a complete collapse of the sugar industry.
Iskander Khan said “Since the industry is in serious trouble and fears worse time ahead, PSMA is calling an emergent meeting to take stock of the situation soon and workout some future line of action”.