|The sugar glut in India is the main cause of the depressed sugar prices
in the world. The production 2007-08 in India is likely to overtake Brazil
as world top sugar producer. International Sugar Organization forecast India’s
production as 33.0 million tonnes raw value against Brazil’s 29.20
million tonnes, both struggling hard to get rid of the surplus to the international
The world sugar is facing heavy surplus for the second consecutive
year in 2007-08. The latest forecast of the world sugar suggests production
at 163-173 million tonnes consumption at 157-160 million tonnes with the
surplus forecast for over 10 million tonnes.
Thus the distinctive excess in the global production over consumption
and the high export availability is expected to have direct impact on
the sugar economy. Consumption and stock ratio is to grow considerably.
Its affect on the domestic process would be significant and particularly
in the case of the good harvest expected.
Outlook 2007-08 (Domestic)
For the second consecutive year the prospects for the sugarcane crop
have been highly favourable as the weather conditions and availability
of irrigation water remained optimum for the sugarcane crop. The plantation
area of sugarcane crop has shown increase of 11 % to 1.147 million hectare.
Province of Punjab and Sindh both, have shown equally the area increase.
With such an increase and the expected yield of 50.6 tonnes per hectare
the production of sugarcane is expected in excess of
58.0 million tonnes, which itself would be a record production of the
sugarcane in Pakistan.
Per statistics the sugarcane utilization by the mills remains on higher
side to around 80% when the production is on higher side as the requirement
for seed and fodder is low. In case the supplies to the sugar mills exceed
47.5 million tonne the sugar production is expected to reach around 4.2
million tonne with a recovery of 8.75 % i.e.
With a carryover stock of 1.0 million tonne the availability of sugar
for the year 2007-08 would be around 5.2 million tonne or even higher.
The consumption projected to 4.20 million tonne the end stock on 30th
Sept’2008 could be repeatedly 1.0 million tonne or more enough for
the desired buffer stock for the period prior to the start of the new
crushing season 2008-09.
In short there would be no room for import of sugar throughout the season
and the prices are to remain stable with a bearish trend due to global
surplus, low prices and high availability in the neighboring India and
Diversification of by-Products remained untapped
1: Use of Ethanol Blended Petrol
Encouraged by the Government and the formulation of the policy on the
use of ethanol being actively persuaded, the sugar industry promptly responded
by establishing more ethanol refineries. At present the annual production
capacity of ethanol at 21 refineries in Pakistan has reached 400,000 tonnes.
With the advent of high crude oil prices in the global market, ethanol
is increasingly seen as an alternative, renewable and environment friendly
fuel of the future.
However, in the absence of a prompt legislation for the use of locally
produced ethanol blended with petrol in Pakistan, ethanol producers had
to face anti dumping measures by the European Union.
Pakistan State Oil and Hydro Carbon Institute of Pakistan on instruction
from Government of Pakistan last year launched a pilot project to introduce
and encourage the use of 10% ethanol blended petrol. PSO started the introduction
in three of its petrol pumps, one each at Karachi, Lahore & Islamabad.
Instead of straightforward legislation for the use of 10% blended petrol,
as is being done worldwide the initiative was handed to the oil lobby
who succeeded in proving the experiment unsuccessful. As long as the policy
for fuel ethanol is controlled by the oil sector the substitution process
will remain slow.
Pakistan imported petroleum products worth US$ 3.10 billion in 2006-07
that constitutes major chunk of its deficits, likely to increase in the
current situation, shift to use of ethanol blended fuel could save considerably
keeping its environmental aspect of importance.
Despite the potential advantages, progress in promoting
bio-ethanol lacks policy impetus. The oil refining companies in collusion
with the ministry of Petroleum have managed to keep a lid on private sector
involvement. Rather than enjoying incentives, the private sector is burdened
with domestic taxes on industrial alcohol sales. Such domestic policy
biases have been compounded by import restrictions abroad, which have
compromised the country’s export potential.
2. Re-consideration of Power co-generation by the Sugar Mills
Under the policy 2002 for independent Power Plants incentive were available
for the power Co-generation units including the sugar mills and it was
decided that the power generated by the sugar mills will be purchased
by NTDC or DISCO concerned at agreed rates approved by NEPRA. The proposed
project was delayed since the acquired gas was not available. Being a
major shift the alternate fuel use was studied.
In recent meeting consideration was given to the Power Co-generation
of sugar mills establishing independent power projects based on duel-fired
system of bagasse and coal. PSMA urges the Government to decide an upfront
Hence the main potential in the diversification of the Pakistan’s
sugar industry still remains untapped and needs to be promptly addressed
to take advantage of the developments in the field where sugarcane is
increasingly seen as an energy crop. Though the sugar industry in Pakistan
has come of age, it faces formidable exciting challenges in the foreseeable
PSMA has always expressed hope that Government of Pakistan will start
extensive research and development work on sugarcane crop and its optimum
At conclusion I am obliged to thank to the Zonal Chairmen and my other
colleagues for their co-operation.