|I have great pleasure to welcome you on behalf of myself and the Central
Executive Committee at the 33rd Annual General Meeting here today.
new members of the year use to be a tradition at this forum, but today
we are given the feeling that even renewal of memberships since last A.G.M
have been continuously ignored which shows member’s lack of interest
towards the Association. We hope that the new Management will attend to
this basic principle which is an instrument of cohesion and unity of the
members that contributes to planning joint strategies and honouring it
to achieve success.
Unfortunately there is also a gap in the Government ranks. It has not
yet realized the necessity of planning strategy on sugarcane plantation,
its quality and yield, establishment of new mills, a perpetual sugar policy,
and sugar export policy. So far decisions are made on ad hoc basis on
request resulting in delay and causing ineffectiveness.
Under such circumstances there is a greater need and chance for the
Association to play its roll for the benefit and future of the Industry.
Association’s roll is at present limited to keep on fighting for
permission of export of surplus production and its applicable rebates,
keep advising Government to stop excessive imports, making presentation
against untimely levy of Taxes etc.
There is an urgent need to regularize association affairs, bring necessary
discipline, and determine roll of the association, formation of special
committee for specific planning and guidance of all members. Very soon
we will be faced with large sugar surplus and low demand in the International
market, which need a very special attention in advance.
Against two years low production of about 2.4 million tonnes production
97-98 set a new record of 3.55 million tonnes of sugar. This was due to
increase in the plantation area of sugarcane by about 15 % with a favorable
weather condition. We wish the increase in sugarcane production were due
to higher yield and not at the expense of some other crop. Yield of the
crop remained under 47 tonnes per hectare on average and a supply of 41.0
million tonnes was milled as compared to 27.36 million tonnes in 1996-97.
The increase in the supply of sugarcane was almost 49 % higher than 1996-97
supply and so was the %age increase in the production, and more significant
increase was in Punjab i.e. 55 %. Out of 76 Mills 71 operated during the
Sugarcane being the only major raw material for manufacture of sugar
has the major share in production cost. Unprecedented increase in the
sugarcane support price by about 47 % increased the sugar production cost
to Rs. 19/- per Kg. The following table shows the direct share of sugarcane
in the production cost.
Sugar Production (Cane) 1997-98 = 3,548,960 tonnes
Sugarcane purchased 1997-98 = 41,062,268 tones
Minimum support price for
40 Kg of Sugarcane = Rs. 35/- Punjab
= Rs. 36/- Sindh
Average price paid inclusive, premium
and other levies = Rs. 40/- per 40 Kg
Average cost / tonne of sugarcane = Rs. 1000/-
Total cost of sugarcane 1997-98 = 41.06 Billion
(Cane) sugar production 1997-98 = 3,548,960 tonnes
Cost of sugarcane per Kg of sugar = 11/57
fixed cost of sugarcane in production cost remained about 62%
Effects of Sugarcane Price
Growers encouraged by the economy of sugarcane crop 1996-97 expanded
the plantation of sugarcane crop with a result of producing almost 50
million tonnes of sugarcane. Since minimum support price was enhanced
by the government sugar mills could not maneouver the price when supply
was in abundance.
With huge surplus foreseen at the time when international prices were
at the verge of slipping downward sugar Mills unwantedly crushed and produced
0.7 million tonnes of surplus (All of this was predicted at our last A.G.M)
beside creating a surplus, mills had to pay around Rs. 11.0 billion extra
over what we think could have been the price of sugarcane if the unwarranted
increase in the support price was not made by the Government.
During short production in 1996-97 season Government hurriedly started
importing sugar prematurely while stocks at mills were still enough for
five months resulting in a glut. Due to sale of imported sugar the sale
of domestic sugar drastically fell and at the same time to compete the
imported low duty sugar domestic sugar prices slid down to a stage of
Rs. 4 /- below production cost. Excessive quantity of imported sugar also
resulted in a huge carryover stock of over 400,000 tonnes. The industry
during shortage of cane had to pay high price and ended up with a loss
Rs. 8.0 billion because the cost of production could not be recovered.
Having received a major blow in 96-97 another setback of unprecedented
increase in sugarcane minimum Support prices with a bumper crop further
crippled the industry. High production plus carryover stock continued
the severe effect of glut as nearly 4.0 million tonnes of sugar was available
for 97-98 season . With local price depressed to its 10-year low international
prices were also on slide due to surplus. Ministry of commerce has been
fixing / adjusting the minimum export prices in accordance to the international
trend in consultation with PSMA. Following were the minimum export price
fixed by the commerce Ministry at different occasion.