Sugar production expected to surpass 5.5 million tons

LAHORE: Sugar output is expected to beat the initial estimate by 300,000 tons this year, according to the official data, as the government stepped up efforts to keep track of the sweetener supply chain.

The Punjab Food Department said the country’s sugar production this year would be 5.5 million tons against the previous estimate of 5.2 million tons.

Till February 26, about 5.2 million tons of sugar has already been produced in the country and sweetener output at the end of crushing season in next couple of weeks would be 5.5 million tons. Punjab has so far prepared 3.45 million tons sugar, followed by Sindh 1.45 million tons and Khyber Pakhtunkhwa managed to produce 330,000 tons.

A sugar dealer said around 50 percent sugar mills have already closed their production and the rest are operating on about 30 percent production capacity.

“The greater-than-estimates sugar production has partly been made possible due to strict monitoring of the Punjab food department,” said an official.

The provincial government made it mandatory for sugar mills in December last year to share details of buyers with the authorities to help in resolving the issue of anonymous and untraceable transactions that lead to massive hoarding and tax evasion. Undocumented transactions cause hoarding of sugar and resultant profiteering by some elements.

The official said the provincial department bound sugar mills under the law to provide full details of buyers in a prescribed form. The development helped in curbing practice of off-the-book sugar manufacturing and marketing, according to analysts. “Yet, about 300,000 to 500,000 tons of sugar is still not figured in the reported volume of sweetener,” said an official.

Earlier estimates of relatively lower production prompted the federal government to allow duty-free import of sweetener. The output is expected to be sufficient to meet the local demand.

On next season, a sugar deal said if sugar mills start their crushing operation in the first week of November then sugar availability would be sufficient but if they somehow manage to linger on till first week of December then there will be shortfall in the market.

“It seems that millers have gradually come up with more consolidated fugues while incorporating earlier off-the-book sugarcane crushing,” said the official. By doing so, they managed to create impression of shortfall in early crushing season and subsequently fetched good sugar price. Industries Department didn't play its role proactively in monitoring sugar production in the country, according to the sources. Despite latest more-than-expected sugar production, its prices would not start to come down anytime soon, especially before end of Ramazan, according to the critics.

This year sugar price is estimated to remain above Rs85-90 per kg at the retail level due to low volumes of sugar in early crushing season coupled and expected costly imports.

A market insider said the government should encourage sugar millers for making timely contracts of importing raw sugar whenever it deems necessary to make it a viable option for reducing sugar production cost. Moreover, there is need to open window of import for refined sugar throughout the year to control sugar prices in the domestic market.