In January 2012, the MoI had informed the Economic Coordination Committee(ECC) of the Cabinet that due to bumper sugarcane crop, sugar production would be 4.8 to 5 million tons against the annual consumption of 3.8 millions tons, which is surprisingly stagnant for the last several years despite substantial growth.  The MoI had also indicated a surplus of 1.3 to 1.7 million tons.

However, Pakistan Sugar Mills Association (PSMA) has informed the government that due to prolonged winter and heavy frost, yield of sugarcane in various areas of the country is reportedly on the decline and requested that export of sugar should only be allowed after the final production figures are in hand and the crushing season is over.

Sugar industry analysts argue that on the one hand about  0.5 million tons of sugar has already been smuggled to Afghanistan and Iran when the price of sugar was Rs 45 per kg in Pakistan and on other hand production of sugar will be lower by 0.4 to 0.5 million tons against earlier estimates.

However there is no unanimity of views about sugar output this year with some analysts maintaining that sugar production will be sufficient for domestic consumption whereas others observe that the government has to import about 0.4 million tons sugar to intervene in the market.

The ECC, in January 2012 had allowed export of 0.1 million tons of sugar to sugar mills on the basis of E forms which implies that export will be monitored by the State Bank of Pakistan (SBP).

When Business Recorder approached an official of concerned Ministry to enquire whether export of sugar is being delayed on the request of PSMA, the reply was in the negative.  "We are still undecided on this matter and it will be discussed at the SAB meeting on March 12," the official added.

Prices of sugar in the wholesale market and retail market have increased substantially after reports of smuggling and lower production compared to earlier estimates. Cabinet has also put Indian sugar on negative list at least for this season.

"Presently sugar deals are being struck at Rs 58-60 per kg," one of the analysts averred.

Chairman PSMA Javed Kayani when contacted said that he does not foresee any shortage in the country.  He added sugar industry has sufficient stocks and the crushing season is still in progress. "Hopefully we will have more than adequate inventory but we must stress on the need to build further strategic reserves through Trading Corporation of Pakistan (TCP) as sugar in Pakistan is still the cheapest in the world and GoP should continue to buy for USC and market intervention," he added.

-MUSHTAQ GHUMMAN