Sugar Crises in Pakistan

Sugar Prices increased to PKR 48/kg
A range of motives came in return to explicit increase in sugar prices but based on my analysis I would blame the cost of production in terms of higher price of sugarcane as the root cause which was mainly due to lesser sugar crops in recent reason. The current sugar price for Sindh is PKR 48/kg and PKR 49.75/kg for rest of the other cities for three months starting from the first of Ramadan. The GoP cut GST by 50% during this period and providing at PKR 38 per kilogram as subsidized sugar rate at all utility stores. It also put no restriction on the inter-provincial movement of sugar and wheat as well.
Sugar Cultivation is anticipated to lowered in FY10
The prices are expected to increase further as the sugar cultivation is anticipated to get down in FY10 at around 3 Million tons compare to 3.2 Million tons in FY09 and to offset this additional impact on sugar prices it’s essential to import the remaining amount of sugar i.e. 75,000 tons from 200,000 tons approved by ECC in February 2009 along with the additional 100,000 tons. The government should need to import at least this much amount of sugar so that it hold sufficient stocks to augment the existing stocks and maintain ‘strategic reserves’ to ensure price stability in the market.
TCP hold 240,000 tons of Sugar in their reserves
Currently, the TCP hold 240,000 tons of sugar in their reserves including 78,000 tons of imported sugar had arrived, 47,000 tons that was in pipeline, while 75 tons import was suspended.
Regardless of the GoP's crackdown against sugar hoarders to check simulated price hike ahead of Ramadan, the mills are still holding over 1 Million tons of sugar whereas as they are constantly claiming that they have only 600,000 – 700,000 tons of sugar stocks.
The banks have provided overall PKR 52 Billion financing to sugar mills for sugarcane crushing during FY09. However, mills have paid only PKR 23 Billion till July 2009 which is the 44% of total loan against the stocks of some 1.2 Million tons of sugar under pledged by the banks against financing of PKR 29 Billion.
The sugar industry requested to SBP to grant 3 months loan extension to the sugar mills for full retirement of outstanding loans and advances against sugar stocks and on July 15, 2009 SBP approved their request.
Furthermore, SBP instructed, that the loans and advances obtained by sugar mills would be retired in four equal phases, starting with 25% reduction at end of July, 2009. The remaining 25% would be by end of August, 2009, September, 2009 and by the end of October, 2009. In return to this extension the millers didn’t sell the pledged sugar in the open market so far.
GoP needs to price the sugarcane for its sucrose
The 'price' to 'weight' the crop is caused to be uncompetitive as the growers producing high sucrose content get the same price as those with low. The research and agriculture department should need to make such policies which consider the sucrose content of the sugarcane rather its weight. Being amongst the top five countries in the world in terms of area covered by sugarcane crop, the GoP should also need to build up a long term policy for sugarcane.