The Sugar Industry in Pakistan – An Overview

The Sugar Industry in Pakistan – An Overview National Sugar Workers Conference IUF- Asia/Pacific 17-18-19 August 2002 - Karachi (Pakistan) Prepared by Jorge Chullén, IUF Sugar Sector Coordinator

1- Agriculture in Pakistan Agriculture is the main economic sector in the Pakistani economy. It contributed with 26.1 percent to the Gross Domestic Product (GDP) in 2000. About 44 percent of the employed labour force works in agriculture, representing close to 41 percent of the total economically active population. About 67 percent of the country’s population of 137 million people lives in the rural areas. According to the Agricultural Census of 1990, there are 5.1 million farms in the country, 93 percent of them are small farms – below 10 hectares – occupying 60 percent of the land. The remaining 7 percent of the farms holds 40 percent of the land. The main cash crops grown in the country are cotton and rice, but wheat and sugar cane are also important. These four are called “major crops.”

Table 1 Pakistan - Economic Active Population by Sectors 2000 (1,000 people) Agriculture Mining and manufacturing Construction Electricity and gas distribution Transport Trade Total employed (inc. others) Unemployed Total labour force Source: Europe World Yearbook, 2001

16,350 4,150 2,500 360 2,110 5,410 37,030 2,420 39,450

Sugar Industry in Pakistan – An Overview

2- Fundamentals Aspects of the Sugar Industry Sugar Cane and Sugar Beet Sugar in Pakistan is manufactured from cane and beet, although cane is the main – and overwhelming – raw material used. There is about 1 million hectares of land under cane and beet in four provinces: Punjab, Sindh, North West Frontier Province (NWFP), and Baluchistan. Punjab and Sindh, cane-growing areas, contribute with about 90 percent of the total area and production. Table 2 Estimated Areas under Cane and Beet and Sugar Production 2002/2003 Production Area (1,000 ha) (1,000 tonnes) Punjab 700.0 34,000 Sindh 250.0 12,500 NWFP 107.0 4,800 Baluchistan 0.6 32 Total 1,057.6 51,332 Source: United States Department of Agriculture

Sugar beet is grown and processed in the North West Frontier Province (NWFP). The government has proposed the expansion of beet sugar to strengthen the industry but has met opposition from the millers who argue that most of the cane factories are not prepared for processing beets, new investment is expensive and seeds would have to be imported. The government has conducted beet-growing experiments in 15 locations in Sindh and Punjab and reported encouraging results. In October 2001, the minister of agriculture said the experiments concluded that beet cultivation in Sindh requires about 35 percent of the water demanded by the cultivation of sugar cane, and about 60 percent in the case of Punjab – with water resources being scarce in the country. The crop is ready for harvest in four to five months and beet allows intercropping. The experiments would continue in the near future to firm up basic recommendations for beet cultivation and to determine ways to introduce it in the agriculture of Sindh and Punjab. Pakistan has also established links with Poland to exchange technology and know-how in sugar beet cultivation and processing. Poland has a large and experienced sugar beet industry. Processing Capacity In 1947, at the moment of independence, there were only two sugar mills in Pakistan: one in the Punjab, the other in the North West Frontier Province, but the area under sugar cane was estimated at 200,000 hectares. Most of the cane Page 2


was processed into non-centrifugal sugar – gur and khandsary. Nowadays, Pakistan counts with 78 listed mills, and centrifugal sugar accounts for up to 75 percent of the processed cane. The expansion of the processing capacity started in 1949 with the building of the Premier mill at Mardan. From 1959-1990, 28 new mills were set up, and in 19901998, another 31 mills came on line. In 1998, the government introduced a threeyear ban in the construction of new mills. It is a major feature of the Pakistani sugar industry the rapid growth of the processing capacity, which, when contrasted to recent production figures, appears to be under-utilized up to about a 45 percent – depending on the year. The country has a daily processing capacity close to 400,000 tonnes of cane, enough to produce 5 million tonnes of sugar per year, and the industry reached a maximum of 3.8 million tonnes in 1999. The campaign usually goes from October/November to May in cane, and from June to July in beet sugar. A question related to installed capacity is how many of the listed 78 mills actually operate on a regular basis. According to government officials 10 mills did not operate in the 2000/01 season while “a few more have gone sick and may not operate during the coming season (2001/02).” There are also three corn-processing facilities and two autonomous alcohol distilleries listed. (The corn-processing company, Rafhan Maize Products Co, Ltd., produces high fructose corn syrup or HFCS, dextrose and glucose, and is a subsidiary of the United States-based Corn Products International Inc.) Production, Consumption, Trade A statistical overview of the Pakistani sugar industry outlines a somewhat erratic evolution of the country’s sugar balance. In the second half of the 1990s, for instance, three years ended in a deficit while the other two in surplus. What calls the attention is the wide variations: deficits to the tune of 371,000 tonnes in 1996 and 716,000 tonnes in 2000 (12 percent and 21 percent of consumption respectively), and surpluses of 417,000 tonnes in 1998 and 516,000 tonnes in 1999 (between 12 and 16 percent of consumption). (All figures are on a calendar-year basis from the International Sugar Organization, ISO.) In the fifteen years between 1985 and 2000, sugar consumption grew by almost one-and-a-half times from 1.4 million tonnes to 3.3 million tonnes. Sugar is widely used in the confectionary industry. International sugar trade is a complex matter. In recent years, the government has banned exports (1995 and 1996), allowed imports, and modified import tariffs, attempting to keep domestic prices under control. The net trade position of Pakistan has followed an erratic behaviour. Exports in the 1990s have fluctuated

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from zero in 1990 and 1991 to 778,000 tonnes in 1998, which followed the zero exports of 1997. Imports in the same period have fluctuated from 367,000 tonnes in 1990 to 869,000 tonnes in 2000, over 480,000 tonnes in 1996 and 1997, but less than 6,000 tonnes in 1994, 1995 and 1999. On the other hand, the political instability of Pakistan and neighbouring countries characterized by the on-going Indo-Pakistani conflict, the international sanctions related to Pakistan’s nuclear tests, the political and military turmoil in Afghanistan, greatly influence the sugar trade in the area. The sugar trade matrix for Pakistan in recent years is shown below.

Table 3 Pakistan - Sugar Trade Matrix 1998-2000 (Tonnes, raw value) Imports

2000

1999

1998

Brazil China India Persian Gulf Thailand Others

103,586 267,268 133,724 163,992 135,555 64,951

0 0 0 305 0 4,271

0 109 6,934 915 0 4,444

Total

869,076

4,576

12,402

11,165 0 0 0

52,264 181,620 197,162 26,628

12,863 633,232 62,271 70,220

Exports Afghanistan India Indonesia Others

Total 11,165 457,674 778,586 Source: International Sugar Organization, Sugar Year Book

One major challenge in assessing the sugar balance in Pakistan is the weakness of the statistical data. For instance, it is reported that not all sugar shipments to Afghanistan, Iran and some countries in Central Asia are listed as exports but included in the domestic consumption figures. (The government banned exports to Central Asia, in part because some “unscrupulous” trade practices.) More problematic appears assessing the sugar balance in relation to the import/export business. International sources reckon the lack of transparency in the industry, mainly because the data on stocks and production forecasts are “notoriously unreliable.” For instance, says the source, the domestic industry

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lobbied for export subsidies in 2000, at the moment when it was becoming evident that a substantial sugar deficit was being built. (Licht ISSR 2000, p. 565.) The situation appears to be repeating itself as this report is written: In May 2002 the Pakistan Sugar Mills Association (PMSA) forecasted a production of 4 million tonnes of sugar for the 2002/03 campaign, due to improved weather conditions and a good monsoon season (at least better than the previous years). Such expected volume of sugar is well above consumption, says the industry, and the government should allow sugar exports. In early 2002, the government agency Trading Corporation of Pakistan (TCP) bought 200,000 tonnes of sugar to serve as a buffer stock and ease the pressure of large sugar inventories on the mills’ financial position. (The TCP will administer the stocks and intervene if the domestic prices were to fluctuate too strongly.) At the same time, the industry was negotiating the exports of 200,000 tonnes to Afghanistan (July 2002). In view of the 4-million tonne production forecast, the industry has proposed exporting an additional 375,000 tonnes. Although it says it losses money when export, due to low international prices, domestic prices would be strengthened. A more dramatic proposal was described by the Business Recorder on 23 May 2002: The PMSA had suggested there would be a surplus of one million tonnes of sugar in 2002/03 – 4 million produced less 3 million consumed – and the industry is willing to export all of it on a self-financing basis.

3- Structural Challenges Sugar cane yields in Pakistan are said to be a major structural challenge for the industry. Pakistan’s cane yields of 45.4 metric tonnes per hectare (mt/ha) compares poorly to the world’s average of 65.2 mt/ha. A more useful and clear comparison is with neighbouring India, which shares most of the agricultural and climatic conditions (especially in Punjab and Sindh). India obtains, on a national scale, 25 tonnes of cane more per hectare than Pakistan, which means agricultural yields about 55 percent higher. (See Table 4.) Local sources point out that the quality of the sugar cane is also low, which relates to the quality of the available cane varieties, the lack of facilities for cane research and development, and scarcity of water resources. Pakistan’s agriculture suffers from water scarcity. A report by the U.S. Agricultural Attaché published by the Department of Agriculture (USDA) says that in 2000/2002 Pakistan suffered the worst drought of its history. Some immediate causes for the drought were two consecutive weak monsoon seasons and inadequate glacier and snow melt. More structural causes, however, relate to poor resource management and planning. When the irrigation system was completed, says the USDA, the demand for water increased by 50 percent, while the capacity (reservoirs) decreased because poor maintenance led to silting. The

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result is that the availability of water on a per capita basis has plummeted to only a fraction of the original volume. This in turn induces the government to encourage farmers to switch from water-intensive crops (sugar cane, rice) to less water-intensive crops such as cotton, adding another factor to the instability of the sugar industry.

Table 4 Agricultural Yields in Sugar Cane in Selected Countries (tonnes/ha) Country

mt/ha

Bangladesh India Iran, Islamic Rep of Iraq Lebanon Nepal Pakistan

39.9 70.6 80.8 21.7 24.4 37.2 45.4

Asia Developing China

65.4 77.1

Country

mt/ha

Argentina Australia Barbados Brazil Colombia Cuba Guyana Mauritius Mexico Peru South Africa Thailand United States World

56.6 75.5 57.8 67.5 82.9 31.8 61.2 70.5 78.6 132.5 74.2 57.7 75.8 65.2

Source: FAO On-line Statistical Database.

As discussed below, other policy elements, including the system of payments and business relations between growers and millers, also work against improving the quality of cane and agricultural yields. Costs of production are said to be USD 320.00 per metric tonne, equivalent to US 14.5 per pound of raw sugar.

4- Government Intervention In the early 1980s the government started a liberalization process allowing some free sugar sales in the domestic market. At present, the fixing of cane prices is one policy instrument to regulate the industry. The government usually announces the support prices for major crops, including sugar cane, before the start of the planting season. Prices are normally fixed above world market prices but below domestic prices. At some point in time, this was intended to be the price at which the mills would buy cane from the growers, but over the years it has become a “floor” or minimum price due to the increased competition for cane

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among mills and between the industry and the non-centrifugal sugar sector. (See below.) Out of the 78 listed mills, there are seven listed as state-owned companies. The most recent privatisation of mills was completed in 1999. The Punjab Privatization Board (PPB) sold the Kamalia mill to Afrah Enterprises for USD 12.1 million, and the Pattoki mill to Aryan Steels for USD 9.5 million. The mills had been previously owned by the Pakistan Industrial Development Corporation. In 2000, the government said it would sell all its concerns in the industry, but no confirmation of the sale of the remaining seven mills (after the sale of Kamalia and Pattoki) was found during the present research. Government intervention is important in the import/export sugar business, as a way to regulate the domestic market. Over the past few years, the government has allowed imports – which the industry complained have flooded the market –, and imposed import tariffs and authorized exports, when a production surplus seemed a likelihood. There are two kinds of import duties. One is a 25 percent import tariff, the other, a regulatory duty, which at the moment of writing has been increased to 30 percent from 20 percent. Total duties on imported sugar are therefore 55 percent. The industry (i.e. millers) has requested the government to keep import duties linked to international prices. As mentioned earlier, the attempts to regulate the internal market (avoiding strong fluctuations of domestic prices) by controlling the international trade encounters serious obstacles in the weakness of the statistical data and the unreliability of the industry’s forecasts. In 2001, the government was considering the elimination of the zoning system, which obliges the growers to deliver the cane to a mill within a certain area. With the introduction of a new voluntary contract system, growers will decide by themselves to what mill to sell their cane. The rationale is that market forces will fix prices and encourage growers and millers to become more efficient and work out their differences. For instance, it is said, growers can seek financial assistance from the mill to buy agricultural inputs; in return the mill would ensure that good quality cane is delivered. In December 2001, the government revived the Sugar Board to address the main problems in the industry. For instance, the new board will promote the research and development in sugar cane such as new cane varieties, fertilizer use, pest and disease control, and cane management. It is expected that the quality of cane and agricultural yields would improve as a result. The board will also look into investments in the farming sector and intervene to fix prices acceptable to growers and millers. The board will look into the marketing and delivery of cane, systems of payment and premiums on sugar recovery. The board will also look into the liquidity and working capital of the industry in general. The board is headed by the minister of agriculture and comprises representatives from other

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ministries, the Pakistan Sugar Mills Association, sugar technologists, and farmer groups.

5- Growers and millers relations From the different accounts available, two of the main groups in the industry – growers and millers – seem not to enjoy a fluid working relationship, influenced by several structural and policy factors. While the processing capacity (number of mills) has increased rapidly, the production of cane has not kept pace with it. The result is a precarious balance between cane supply and demand. The government fixes a price for the cane at the start of the planting season – which functions as a minimum price. In fact, mills have been reported as paying twice as much as the government-legislated price, because of competition from other mills and from the non-centrifugal sugar sector (gur). To this is added the on-going disputes about weighing of cane: In several locations, growers have complained of faulty weight bridges used to under-weigh the cane and demanded that weighing be done only on government-approved weighing bridges and not on privately-owned ones. Disagreements over prices have resulted in growers withholding cane or diverting it to gur production, but also in millers refusing to buy the cane. The zoning system, a regulatory measure supposed to help stabilizing the supply and delivery of cane, became another matter in the “tug-of-war” between the groups. Millers want the reestablishment of the “old” system which enabled them to buy cane from the area in the vicinity of the mills, but growers complain that the “old” system allowed the millers to treat them as “captive sellers,” paying them less than the government-fixed prices and encouraging inefficiencies in the transportation of cane – which contributes to further deterioration in the quality of the cane. According to industry sources, the quality of the cane is very low, i.e. cane with low sucrose content, which seems related to the system that pays the cane based on the average sugar recovery of the mill and not on the quality of the cane of individual growers. As the mills process cane – of good and bad quality – from different growers, this system discourages growers from improving the quality of their cane given that they will not profit from any improvement. (The system also raises the question of mills efficiency.) The negative impact of the system is compounded by frequent delays on payments, and payments carried over to the following harvest. In between the growers and the millers operate the middlemen, who (apparently) take advantage of the financial limitations of both and the frequent dispute between them. As the mills seek for capital for starting-up operations of the harvest and the initial buying of cane, they resort to the middlemen who purchase

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the cane from the growers. From the mills’ viewpoint this helps to start the campaign, even though it increases costs. From the growers’ viewpoint this might be a way to get prompt cash for their crop. The overall impact, however, is a lower-than-needed cane price for growers and a higher cane price for millers. It was reported that in the 2000/01 harvest, for instance, middlemen working on commission – from the growers – sold the cane with a surcharge that fluctuated from 10 to 55 percent above the price that eventually was paid to the grower. In other instances, growers have complained that the middlemen are actually working for the mills and are not the independent group they appear to be. The millers are organized in the Pakistan Sugar Mills Association (PSMA), which was set up in 1965. Millers have corporate links with other sectors of the economy and, lately, strong political ties. They appear as a very influential voice in the politics affecting the industry, and usually act as spokespersons for the whole industry. Growers, on the other hand, appeared relatively un-organized, and sometimes the regional chambers of commerce and agriculture assume their representation.

6- Gur Production The production of non-centrifugal sugar (gur and khandsary) has lost ground to the production of centrifugal sugar. In 1947, when the country had only 2 small centrifugal mills with a daily processing capacity of less than 400 tonnes of cane, the overwhelming proportion of the cane grown on the estimated 200,000 hectares went to the production of gur and khandsary. Nowadays, it is estimated that less than 20 percent of the total cane grown (about 47 million tonnes) is used in the non-centrifugal sugar production. In recent years, gur production and consumption is reported to be rising because of several factors: The influx of Aghfan refugees, a novel process of decolorization or whitening, and, it is reported, the use of gur in payments in the trafficking of opium from Afghanistan. It is also said that gur prices in Afghanistan, Iran and some countries in Central Asia sometimes exceed prices for refined sugar, and these countries have become an attractive market for the non-regulated gur sector. Although gur production uses only a small portion of the cane grown in Pakistan, it plays an important role in the growers-millers relations. In more than one occasion in the late 1990s, growers diverted cane to gur production because of disagreements on prices, late payments, or because the mills faced liquidity problems. One such example happened in 1995/96, when it was reported that almost 40 percent of the total cane produced in Pakistan was diverted by the non-centrifugal sugar sector due to price disputes and mills’ liquidity problems.

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The government in NWFP, where the competition for cane between the centrifugal and the non-centrifugal sugar sectors appears more evident, is considering the regulation of gur manufacturing. For instance, it is reported that all producers with a capacity to produce over 330 kilograms of gur per year (and equipment with a cooking pot exceeding 36 cubit feet and energy used of over 12.5 HP) would need to register and obtain a license to operate. According to official sources there are some 8,000 gur units in Peshawar and Mardan, the leading cane growing areas in NWFP. Gur production, considered a “cottage industry,” remains in general unregulated, however.

7- Corporate Milling Structure In a sugar industry with the characteristics of Pakistan’s industry, corporate links are complex and, very often, closely intertwined with the political establishment and the use of the power of the state. More than one of the local sugar analysts consulted during this research hesitated little in underlining the political influence of a small group of sugar industrialists, whose merits sprung not from belonging to old sugar families but because they “have been part of … previous governments… (in) a period when political corruption prevailed.” The connection between politics and sugar appears as a very plausible explanation for the explosive growth in the processing capacity in the 1980s and 1990s. The “mushrooming” of mills in prime sugar lands not only upset the arrangement already in place in those areas, when growers were obliged to deliver their cane to new mills, but also because the mills were set up with expensive loans, which were not always repaid. Facing this powerful bloc, government agencies appear weak and with limited resources. There are on-going denunciations, for instance, that taxes (sugar cess) deducted and held by millers very seldom reach the government on time and in the amounts expected. The absence of a strong and timely auditing system encourages misuse and, quite probably, misappropriation of funds. As one local commentator puts it: There are some three dozen mills operating in the Punjab, whose annual businesses amount to billions of rupees, but “development projects completed with the help of the sugar cess are quite negligible in the central part of the province while such projects are almost non-existent in its southern part i.e. the Seraiki region.” A more direct impact of this power appears to be on mill efficiencies – how much of the sucrose contained in the cane is recovered by the mills. To the taste of local observers, there is a marked tendency for factory efficiencies to be lower in the more economic and political powerful groups. In The voiceless sugarcane growers, a commentary that appeared in Dawn (31 January 2000), a local observer reviewed mill efficiency index in Pakistan in relation to other countries, ranking his country behind Argentina, Australia, Brazil, South Africa and several

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others. Quite interestingly, the commentator turns his gaze inwards and quotes recovery rates for the Punjab, which, he says, vary from 7.26 percent to 9.44 percent, and lists examples from the 1997/1998 season: Ittefaq mill 7.59 percent, Ramzan 7.59 percent, Hussain 7.81 percent, Kamalia 7.50 percent, Chaudhry 7.68 percent, Hyesons 8.95 percent, Fauji 8.06 percent, Adam 8.31 percent and JDM 9.44 percent. He adds: “The more the politically powerful the mill owner, the lessor (sic) the rate of recovery.” Additionally, there is no arrangement by which growers would be able to monitor the processing of the cane and ensure that the process is properly done, simply because millers are powerful enough as to prevent them from participating in it. With these comments in mind, what follows is a broad overview of some corporate links, based on the information available at a web site (members.tripod.com/richpaki/). The Al-Noor Group of Industries started operations with an export company in the early 1950. The group’s core business continues to be sugar manufacturing and trading, with two plants: Al-Noor Sugar Mills and Shahmurad Sugar Mills Limited. The group also controls Modaraba Fund, a large trading and investment fund. The group owns unlisted companies in other economic sectors such as textiles (Al-Asif Textile, Ahmad Hosiery Mills (pvt) Ltd, Fantasy Garments, Vilon Garments (pvt) Ltd.) and trading (Sufyan Trading, Ebrahim Trading). Other concerns include Aurangzeb IMPEX, Sindh Particles Board, Delite Industries, AlNoor Fertilizer. Ghulam Faroow, from the Khattak family of North West Frontier Province (NWFP), heads the Mirpur Khas Sugar Mills. He founded the governmental Pakistan Industrial Development Corporation (PIDC) and headed several government corporations until 1968. Listed among his businesses are Cherat Cement, Cherat Papersack, Greaves Air Conditioners; and some unlisted companies like Greaves Cotton (pvt) Ltd, Associated Constructors (pvt) Ltd, Greaves Modaraba Services (pvt) Ltd, Greaves Carbon Products (pvt) Ltd and Greaves Power Engineering. The United Group of Companies (Sadiqsons) grew considerable during the premiership of Nawaz Sharif (1990-93, 1997-99). In the early 1990s, the group bought Pasrur Sugar Mills for a token price of one (1) rupee. The mill did not perform and the United Sugar Mills defaulted in its loan repayments to the nationalized commercial banks. Other companies under the group include United Sugar, Sajjad Textile, International Floor Covering, United Carpets, United Woolen, United Jute, Sana Fabrics, Ahmad Spinning. Unlisted companies include: United Paints, Pasrur Sugar Mills, S. Mohammad Saeed Goreeja & Co. The Bawany Group was founded by two brothers towards the end of the XIX century, when they migrated to Burma. After returning to India, they moved to

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Pakistan in 1947. Members of Bawany family are active in several sectors: textiles, jute, sugar, particle board, oxygen, leather, garments, tanneries and cables. Al-Noor (see above) is reported to be a offshoot of Bawany and the two have joint interests in several companies. Companies owned include Bawany Sugar, Faran Sugar, Pioneer Cables, Bawany Air Products Ltd., Annoor Textile, Bewany Metals, Latif Jute Mills, Pakistan Telephone Cables. The strength of the Shahnawaz Group lies in the parent company Shah Nawaz Limited, one of the biggest trading company in Pakistan, which represents multinationals like the German carmaker Mercedes Benz and NEC computers. The group is also involved in trade with former socialist countries. Among the companies owned are the Shah Taj Sugar, Shezan International, Shahnwaz Textile, Shah Taj Textile, Benz Industries, Shah Pur Textile; and unlisted companies such as Hatter Fruits (pvt) Ltd and Shah Nawaz Ltd. The Fauji Foundation controls several sugar businesses: The Fauji Sugar Mills Tando Mohammad Khan, the Fauji Sugar Mills Khoski, the Fauji Sugar Mills Sangla Hill and the Fauji Sugarcane Experimental & Seed Multiplication Farm, all of whom declared a collective loss of 1 billion Pakistan rupees in 2000 (USD 16.7 million). The group also owns Fauji Cement Company Limited and the FFC Jordan Fertilizer Company Limited (FJFC); the Fauji Cereals, the Fauji Corn Complex, the Fauji Polypropylene Products, Foundation Gas, the Fauji Fertilizer Company Limited, the Fauji Oil Terminal and Distribution Company Limited, the Mari Gas Company Limited and the Fauji Kabirwala Power Company Limited. The Premier Group established one of the oldest sugar mills in Pakistan, the Premier Sugar Mills. It also owns Chasma Sugar and Frontier Sugar.

8- Final Comments Although more information on the agricultural aspects and corporate structure and precise details on the sugar policy are needed to draw a more complete description of the industry, the overview of the Pakistani sugar industry herein outlines an industry facing continuous difficulties and problems. Such impression, unfortunately, seems to be a fair representation of reality. Seen from afar, and in comparison with industries which might be reckoned as better organized, Pakistan’s sugar industry faces major structural challenges, policy decisions, and strained working relations among the groups involved in the industry (even though workers and unions have not been part of this review). Structurally speaking, the mills’ overcapacity – beyond the reasons for it – tends to create an imbalance in the supply/demand of cane, while maintaining the cultivation of sugar cane, a water-intensive crop in a water-scarce agriculture, will always be a major challenge. The government’s attempts at using some policy

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tools, like controlling the domestic market and prices through import/export measures, face the lack of reliable information. From another viewpoint, the social and political configuration of the industry, with a strong millers’ organization and relatively weak grower organizations and governmental agencies, tends to produce a balance of power skewed in favour of the industrialists; a situation that, in the recent past, has contributed to create more problems than to find solutions for the challenges facing the sugar industry in Pakistan.

Sources Consulted: Statistics used in the text are from the International Sugar Organization (ISO) Year Book, reports from the U.S. Agricultural Attachés published by the Department of Agriculture of the United States (USDA), and the on-line FAO statistical database at apps.fao.org/page/collections. News on the industry was obtained from the International Sugar and Sweetener Report (ISSR) published 36 times a year by F.O.Licht, a Germany-based analysis commodity group, from the Internet editions of two Pakistani newspapers: the Business Recorder (www.brecorder.com) and Dawn (www.dawn.com), and the Sugar Worker, the IUF newsletter on the sugar sector. The F.O.Licht’s 2002 Yearbook was used to produce the list of mills which appears in the appendix. Other sources used are quoted in the text.

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Statistical Appendix Pakistan Sugar Balance 1970 - 2000 Year Production 770,000 1970 1975 489,584 685,571 1980 1985 1,450,000 1,989,174 1990 2,198,097 1991 1992 2,630,000 1993 2,750,000 3,196,000 1994 3,116,000 1995 1996 2,662,000 1997 2,634,971 3,502,530 1998 3,712,108 1999 2000 2,614,000

Imports 334 11,225 164,375 39,000 367,833 265,833 105,000 49,000 5,643 4,048 484,621 486,776 12,402 4,576 869,078

Exports Net Trade 77,274 76,940 0 (11,225) 0 (164,375) 0 (39,000) 0 (367,833) 0 (265,833) 20,000 (85,000) 20,000 (29,000) 145,000 139,357 342,738 338,690 100 (484,521) 0 (486,776) 778,586 766,184 457,674 453,098 11,165 (857,913)

Source: International Sugar Organization, Sugar Year Book.

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Consumption 625,000 520,000 781,000 1,400,000 2,289,960 2,662,312 2,720,000 2,747,000 2,945,000 2,971,000 3,033,000 3,023,000 3,085,000 3,196,000 3,330,000

Ending Stocks 293,449 162,918 274,954 837,769 1,001,296 802,914 797,914 1,030,867 1,142,510 948,820 1,062,341 1,161,088 812,434 875,444 1,017,357

Pakistan – Area and Production of Sugar Cane and Beet by Provinces 1993/94 – 2002/03 1993/94 Area (1,000 ha) Punjab Sindh NWFP Baluch Total

1994/95

596.2 265.8 100.3 0.5 962.8

Production (1,000 tonnes) Punjab 24,511 Sindh 15,421 NWFP 4,470 Baluch 25 Total 44,427

1995/96

1996/97

1997/98

1998/99

1999/00

2000/01

2001/02

2002/03

656.7 249.7 102.1 0.5 1,009.0

605.6 265.0 102.3 0.5 973.4

604.2 251.2 108.4 0.7 964.5

85.3 61.6 08.6 0.7 1,056.2

780.3 270.8 103.3 0.7 1,155.1

672.1 230.6 106.3 0.8 1,009.8

615.5 238.8 106.0 0.7 961.0

657.0 241.0 106.0 0.7 1,004.7

700.0 250.0 107.0 0.6 1,057.6

28,268 14,310 4,562 27 47,167

26,880 15,187 4,565 28 46,660

24,010 13,110 4,842 36 41,998

32,111 16,000 4,957 38 53,106

33,383 17,051 4,720 38 55,192

27,081 14,291 4,917 43 46,332

26,740 12,050 4,785 32 43,607

31,803 11,679 4,813 32 48,327

34,000 12,500 4,800 32 51,332

Source: Department of Agriculture of the United States, Foreign Agricultural Service Reports, various issues.


Pakistan - Sugar Cane and Beet Processing Facilities Factory

Company

Province

Daily Processing Capacity Cane

Ahmed Nagar Anwerabad Asifabad Badin Bhalwal Bhowana Chak 226 GB Chak 4 Ford Wah Chak 407 GB Chak 542 GB Chak 84/15-L Chunian Darya Khan Deenpur Deh Charo Deh Jagsayani Deh Kinjher Deh Rajauri-2 Deh Tharo Unar Digri Faisalabad Fazalgarh Sanawan Gojra Jamraq

Bawany Sugar Mills Ltd. Sheikhoo Sugar Mills Ltd. Al-Asif Sugar Mills Ltd. Army Welfare Sugar Mills Noon Sugar Mills Ltd. Ramzan Sugar Mills Ltd. Gojra-Samundri Sugar Mills Ltd. Adams Sugar Mills Ltd. Chanar Sugar Mills Ltd. Tandlianwala Sugar Mills Ltd. Punjab Sugar Mills Ltd. Brothers Sugar Mills Ltd. Fecto Sugar Mills Ltd. Sindh Abadgars Sugar Mills Ltd. Mirza Sugar Mills Ltd. Ansari Sugar Mills Ltd. Larr Sugar Mills Ltd. Pangrio Sugar Mills Ltd. Sakrand Sugar Mills Ltd. Digri Sugar Mills Ltd. Crescent Sugar Mills Ltd. Fatima Sugar Mills Ltd. Chaudry Sugar Mills Ltd. Mirpurkhas Sugar Mills Ltd.

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Sindh Punjab Sindh Sindh Punjab Punjab Punjab Punjab Punjab Punjab Punjab Punjab Punjab Sindh Sindh Sindh Sindh Sindh Sindh Sindh Punjab Punjab Punjab Sindh

6,000 6,000 3,000 3,500 2,500 8,000 3,000 3,500 4,000 6,000 3,500 10,000 5,000 4,200 4,000 5,000 4,000 3,000 6,000 4,500 1,500 4,000 6,000 4,500

Beet

Alcohol

Refining Production

50,000

25,000


Jan Muhammad Wala Jaranwala Jauharabad Jetha Bhutta Jhang Jhoke Shareef Jilaniabad Kamalia (1) Khazana Khoski Kot Bhadur Lalian Layyah Mandhi Bhauddin Mano Chak Mardan Matiari Merajabad Merajabad Mirwah Gorchani Naroo Dhoro Nawabshah Noor Jehania Noorpur Okara Pattoki (2) Qaiyumnagar Ranipur Sanghar

National Sugar Indusries Ltd. Husein Sugar Mills Ltd. Kohinoor Sugar Mills Ltd. Hamza Sugar Mills Ltd. Shakarganj Mills Ltd. Shah-Murad Sugar Mills Ltd. Dewan Sugar Mills Ltd. Kamalia Sugar Mills Ltd. Khazana Sugar Mills Ltd. Fauji Sugar Mills Ltd. Indus Sugar Mills Ltd. Pahrianwali Sugar Mills Ltd. Layyah Sugar Mills Ltd. Shahtaj Sugar Mills Ltd. Phalia Sugar Mills Ltd. Premier Sugar Mills Ltd. Matiari Sugar Mills Ltd. Adbullah Sugar Mills Ltd. Haseeb-Waqas Sugar Mills Ltd. Al-Abbas Sugar Mills Ltd. Khaipur Sugar Mills Ltd. Habib Sugar Mills Ltd. Al-Noor Sugar Mills Ltd. Ittefaq Sugar Mills Ltd. Baba-Fareed Sugar Mills Ltd. Pattoki Sugar Mills Ltd. Chashma Sugar Mills Ltd. Ranipur Sugar Mills Ltd. Sanghar Sugar Mills Ltd.

Page 17

Punjab Punjab Punjab Punjab Punjab Sindh Sindh Punjab NWFP Sindh Punjab Punjab Punjab Punjab Punjab NWFP Sindh Punjab Punjab Sindh Sindh Sindh Sindh Punjab Punjab Punjab NWFP Sindh Sindh

4,000 6,000 4,000 3,500 10,000 8,000 7,500 5,000 3,000 4,000 4,500 4,000 3,000 8,000 5,000 3,820 3,500 6,500 8,000 4,000 4,000 7,500 4,000 6,000 3,000 4,000 6,500 3,500 4,500

25,000 40,000

2,350

25,000

2,500

50,000

82,500 40,000


Sangla Hill Sarai Naurang Seri Shahpur Sharin Shorkot Sillanwali Takt-I-Bhai Tando Allahyar Tando Ibrahim Bawany Tando Muhammad Khan

Fauji Sugar Mills Ltd. Bannu Sugar Mills Ltd. Seri Sugar Mills Ltd. Yousuf Sugar Mills Ltd. JDW Sugar Mills Ltd. Kashmir Sugar Mills Ltd. Chishtia Sugar Mills Ltd. Frontier Sugar Mills Ltd. Mehran Sugar Mills Ltd. Farah Sugar Mills Ltd. Fauji Sugar Mills Ltd.

Punjab NWFP Sindh Punjab Punjab Punjab Punjab NWFP Sindh Sindh Sindh

Totals Capacity in tonnes per day; alcohol production in litres per day. Source: F.O.Licht, World Sugar and Sweetener Yearbook 2002.

Page 18

3,800 2,000 4,000 7,500 4,500 6,000 3,000 1,200 7,000 6,000 4,000 308,020

1,000

5,850

15,920

-

353,420