Sugar Industry of

Pakistan-An Analysis
SUBMITTED TO: SIR KAMIL SHAHBAZKER
Table of Contents
INTRODUCTION: ............................................................................................................................................ 4
HISTORY: ....................................................................................................................................................... 4
PAKISTAN SUGAR INDUSTRY: ........................................................................................................................ 4
SUGAR PRODUCTION 2015-16 “000” HECTARES/TON: ................................................................................ 4
GLOBAL ANALYSIS : ....................................................................................................................................... 5
EXPORTS ........................................................................................................................................................ 5
IMPORTS ....................................................................................................................................................... 6
EMERGING MARKETS: ................................................................................................................................... 8
ANTI-DUMPING POLICIES:............................................................................................................................. 8
GLOBAL COMPETITORS: ................................................................................................................................ 8
PRICE OF SUGAR: .......................................................................................................................................... 9
SUGAR INDUSTRY SNAPSHOT: .................................................................................................................... 10
DECADE WISE ANALYSIS:............................................................................................................................. 10
1947 and 1950s: ...................................................................................................................................... 10
Production at early stages: ................................................................................................................. 10
1960s: ...................................................................................................................................................... 11
1970s: ...................................................................................................................................................... 11
1980s: ...................................................................................................................................................... 12
1990s: ...................................................................................................................................................... 13
2000-2015: .............................................................................................................................................. 13
2016-2017 (current scenario): ................................................................................................................ 14
PORTER’S DIAMOND MODEL ANALYSIS:..................................................................................................... 17
Demand Conditions: ............................................................................................................................... 17
Factor Conditions: ................................................................................................................................... 18
RELATED AND SUPPORTING INDUSTRIES: .............................................................................................. 20
Government: ........................................................................................................................................... 21
Chance: ................................................................................................................................................... 23
Firm Strategy Structure and Rivalry: ....................................................................................................... 24
PORTER’S FIVE FORCES MODEL: ................................................................................................................. 25
1) Entry and Exit Barriers: High. .......................................................................................................... 25
2) Level of Rivalry: High ....................................................................................................................... 26
3) Bargaining Power of Buyers: Low. .................................................................................................. 26

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 4) Bargaining Power of Suppliers: Low. .............................................................................................. 27
5) Threat of Substitutes: Low. ............................................................................................................. 27
SWOT ANALYSIS: ......................................................................................................................................... 28
STRENGTHS OF THE INDUSTRY: .............................................................................................................. 28
WEAKNESSES OF THE INDUSTRY:............................................................................................................ 29
OPPORTUNITIES FOR THE INDUSTRY: ..................................................................................................... 30
THREATS TO THE INDUSTRY: ................................................................................................................... 31
My Idea : ................................................................................................................................................. 31
Sustainable, competitive, differential advantage of my company and product: ................................... 31
CONCLUSION:.............................................................................................................................................. 33
REFERENCES: ............................................................................................................................................... 34
ANNEXURE: ................................................................................................................................................. 35

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INTRODUCTION:
The importance of Sugar Industry for Pakistan’s economy is clear from the fact that it is the 2nd
largest agriculture based industry in Pakistan after Textile and it adds 1.9% value to our GDP and
3.2% in agriculture. Sugar Industry in Pakistan is also a source of employment for more than 1.5
Million people and is ranked 5th in Sugarcane production and 9th in Sugar production. Moreover,
the two main raw materials that are used for Sugar production in Pakistan are Sugarcane and
Sugar Beet.

HISTORY:
When Pakistan came into being i.e. in 1947, there were only two sugar mills in the country one
was in Punjab and second was in KPK (old name NWFP). The total production of these two mills
was just 7,932 tons which was way less than our local demand. Therefore, government felt the
need to increase the sugar production and created Pakistan Sugar Mills Association (PSMA) in
1957 to frame a system for the growth of sugar industry. In this regard the first sugar mill in Sindh
province was established at Tando Muhammad Khan, Hyderabad in the year 1961.

PAKISTAN SUGAR INDUSTRY:

Talking about the recent situation of Pakistan Sugar Industry, currently there are 87 Sugar Mills
working in Pakistan (45 are in Punjab, 33 in Sindh and 9 in KPK). Out of these 87 Sugar Mills only
5 of them use Sugar Beet as a raw material to produce Sugar the rest use Sugarcane. Therefore,
only 3.5% of sugar is produced by sugar beet in Pakistan which is very low as compared to 21%
globally. Even though, it’s cheaper to produce Sugar through Sugar Beet as compared to
Sugarcane. Moreover, Sugar Industry in Pakistan has a capacity to produce 6.8 Million Tons of
Sugar in a season but only 75% is being utilized. Also in Pakistan, the average recovery of Sugar
is just 9.1% as compared to world’s 10.6% avg. It’s less than half of the countries producing Sugar.

SUGAR PRODUCTION 2015-16 “000” HECTARES/TON:

• Sugarcane planted = 1,134
• Sugarcane produced = 65,451
• Sugarcane crushed = 50,043
• Utilization by mills = 76.45%
• Sugar produced from cane = 5,262
• Sugar produced from beet = 0.053
• Total sugar produced = 5,315
• Carryover stocks (Mills & TCP) = 1,265
• Sugar availability for 2015-16 = 6,580

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 • Exported = 0.275
• Domestic consumption2015-16@25.1kg/c = 4,900
• Carry forward for 2016-17 = 1,680

GLOBAL ANALYSIS :
EXPORTS

Sugar exports by Pakistan during 2011 totaled US$36.7 billion which is total 41.1% decrease
from 2011.Sugar exports by country during 2015 totaled US$ 21.6 billion. The value of global
sugar exports dipped -19.8% from 2014 to 2015. The only countries to grow the value of their
sugar exporters since 2011 were: Guatemala (up 31.5%), Netherlands (up 15%) and Swaziland
(up 7.3%). Brazil led the decliners with a -48.9% exported sugar setback, followed by the United
Arab Emirates (down -46.1%), Germany (down -43.4%) and Colombia (down -41.5%). Latin
America accounted for the highest dollar value worth of sugar exports during 2015 with
shipments amounting to $10.3 billion or 47.6% of global sugar shipments. Despite the five-year
downturn in export sales, Brazil still maintains the highest surplus in the international trade of
sugar. In turn, this positive cashflow confirms Brazil’s strong competitive advantage for this
specific product category.

Pakistan ranks 68 among Exporters of Sugar in the World

Rank Exporter 2015 Sugar Exports % World Total

1 Brazil US$7.6 billion 35.30%

2 Thailand $2.6 billion 12.20%

3 India $1.2 billion 5.50%

4 France $1.1 billion 5.10%

5 Guatemala $852 million 3.90%

: : : :

: : : :

68 Pakistan $17.6 million 0.10%

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 Exporters of Sugar in the World
40.00%

35.00%

30.00%

25.00%

20.00%

15.00%

10.00%

5.00%

0.00%

IMPORTS
Sugar imports by Pakistan during 2011 totaled US$40.1 billion. A total 43.6% decrease from
2011
Sugar imports by country during 2015 totaled US$ 22.6 billion. Asian countries had the highest
dollar worth of imported sugar during 2015 with purchases valued at $9.7 billion. The fastest-
declining sugar importers since 2011 were: Indonesia (down -60.8%), Japan (down -60.4%),
Spain (down -57.9%) and Algeria (down -50.3%). Three countries posted increases in their
imported sugar purchases, namely India with its 995.3% increase, Myanmar (Burma) up 748.7%,
and Sudan up 17.1%.

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 Pakistan ranks 85 among Importers of sugar in the world

%
World
Rank Importer 2015 Sugar Imports Total

United
1 States US$1.83 billion 8.10%

2 China $1.77 billion 7.80%

3 Bangladesh $790.9 million 3.50%

4 Malaysia $711.3 million 3.10%

South
5 Korea $692.4 million 3.10%

: : : :

: : : :

85 Pakistan $48.3 million 0.20%

Importers of sugar in the world

9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%

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EMERGING MARKETS:
India permitted refiners and millers to import up to 5 lakh tonnes of raw sugar duty-free
just two weeks ago. However, this is inadequate for the coming months and there is a need
for Sugar in the Indian market. India is expecting another 15-20 lakh tonnes in the upcoming
months All other markets have been declining except for Myanmar and Sudan
However, the possibility of using Sugar cane for Ethanol production is immense and is still
considered as a growing market.

ANTI-DUMPING POLICIES:

On December 19, 2014, The Department of Commerce and the Government of Mexico
(``GOM'') signed an agreement suspending the countervailing duty investigation on sugar from
Mexico.
The basis for this action is the agreement by the Government of Mexico
• not to provide any new or additional export substitution subsidies on the subject
merchandise
• to restrict the volume of direct or indirect exports to the United States of sugar from all
Mexican producers/exporters
• To eliminate completely the injurious effects of exports of this merchandise to the
United States

GLOBAL COMPETITORS:
Following are the Global competitors that are exporting Sugar
• Copersucar (Brazil)
• Cosan (Brazil)
• Mitr Phol Group (Thailand)
• Thai Roong Ruang Sugar Group (Thailand)
• Tereos S.A. (France)
• EID Parry Limited (India)
• Südzucker AG (Germany)
• Nordzucker Group (Germany)
• British Sugar Plc (United Kingdom)
• Louis Dreyfus Group (Netherlands)

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PRICE OF SUGAR:

Types of Sugar:
• White Sugar

1. Fine Sugar
2. Fruit Sugar

• Brown Sugar

1. Evaporated Cane Juice

2. Turbinado sugar

• Liquid Sugar
1. Invert sugar

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SUGAR INDUSTRY SNAPSHOT:

DECADE WISE ANALYSIS:

1947 and 1950s:

At the time of independence in 1947, there were only two sugar factories in Pakistan which were
insufficient to meet the domestic requirements, paving the way for imports.
Initially the government followed the policy of The Sugar Factories Control Act (1950) and the
accompanying Sugar Factories Control Rules to regulate the marketing of cane by growers to
mills. Under the provisions of the Act, mills were allocated zones or areas from where they were
required to procure a specified proportion of their cane requirements. This proportion varied
between provinces. It was 80% in the Punjab, 65% in the NWFP, and 100% in the Sind. In turn,
growers in mill zones were obligated to supply sugar mills a similar proportion of their cane
production. Utilization of cane for other purposes was restricted by regulations such as Section
144 which prohibited growers from making gur beyond a certain minimum to meet their
domestic needs.
Though keeping in view the importance of sugar industry, the Government setup a commission
in 1957 to frame a scheme for the development of sugar industry. In this way, a total of up to 4
more sugar industries being established in Pakistan in 1950s.
Production at early stages:

As shown by Figure the

sugarcane production in
Pakistan has advanced in
rather regular cycles of
increases and decreases
from the beginning only.
This follows from the
practice in Pakistan of
ratooning (growing from the
roots of cut plants) for 1-2
years after each planting.
The overall increase in
production was largely due
to increases in the acreage
of sugarcane while yields
remained stagnant.

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1960s:
During 1960s our sugar mill capacity increased rapidly, due to the liberalization sanctioning and
credit policies which was coupled with the ‘pro-business’ policy environment that induced private
investment in the business with the establishment of 13 new sugar mills in Pakistan, out of which
12 were in the private sector (first sugar mill in Sindh was also established). There was a slight
increase in the yields of production for sugar in 1960s (majorly 1965) due to the green revolution
tactics introduced such as the HYV seeds usage which increased our per hector yield. However,
after that the yields remained stagnant. Since 1965 there is no evidence for the increase in the
trend of sugarcane yield and so the increase in production from 1947-1987 can solely be
associated to the increase in sugarcane acreage.

1970s:
The increases in acreage since the mid-1970s have been supported by gradually increasing cane
prices. As cane prices increased, gur prices also moved up in a rather erratic pattern. However,
gur prices did not increase enough to encourage additional gur production. Also, during 1970s
Sindh emerged as a major cane producing site with its share increasing from 19% to 27% in
between 1970 to 1986, majorly due to favorable climatic conditions for increased yields. While
the share of Punjab and NWFP started decreasing since then. In addition to this 12 new mills
were established but due to nationalization half of these were in the public sector (though in late
1970s the new government policy again shifted towards the private sector). However, in the late
1970s as production stagnated, imports grew, and budgetary subsidies were required to keep
consumer prices below production costs.
As per the price policy and distribution control, from 1972 to 1981 i.e. during Nationalization, the
ex-mill and retail prices of sugar were determined by the government which had a monopoly on
its purchase and sale. The Provincial Food Departments were responsible for the distribution of
sugar through government ration shops which lifted the product directly from mills for sale to
the public.

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1980s:
Till 1980s the sector was majorly dominated by small cottage farms except for the mills in Sindh.
Between 1948 and 1987, sugarcane acreage increased by about 4% per year and its share of total
cropped area rose from 1.6% to 3.9% and 10 new sugar mills were established. The expansion of
the area planted to cane occurred in response to high support prices for cane and expansion in
mill capacity. High support prices made sugarcane more profitable relative to other crops while
the expansion in mill capacity provided a market for the increased production.
However, since 1982, cane production, in fact, declined by over 4% per year until 1987 due to
reasons as droughts, low power availability to operate tube wells, and static cane support prices
though there appears to have been some recovery in 1987 and 1988.
After the nationalized price and distribution policy for sugar in 1970s in 1981, price and
distribution controls were relaxed and mills could sell 10% of their production in the open market.
As the supply situation improved, sugar was de-rationed by the government in 1983 and all price
and distribution controls on white sugar were lifted. Mills could now sell to whomever they
wanted to and at whatever rate the market could bear.
In 1983, sugar was placed on the 'free list' of importable commodities and the private sector
could import it directly. At the same time, the government imposed a prohibitive import duty of
Rs 6.50 per kilogram on refined sugar. The import duty on sugar was subsequently reduced to Rs
5 per kilogram in July 1985 and Rs 4 per kilogram in February 1986 as the government sought to
encourage imports by the private sector to alleviate upward pressure on domestic sugar prices
due to production shortfalls.

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The consumer subsidies reached a peak in 1981 when large quantities of sugar had to be
imported at a time of high international prices to meet domestic production shortfalls after a
period of surpluses in the early 1980s.

1990s:
The output of sugar as well as the production of sugarcane increased at an average rate 24
percent and 11.7 percent during 1990-2000. The production increased largely due to the increase
in cultivated area and the increase in average per hectare yield of sugar cane, which wasn’t the
case in the previous decades, but the increased output could not meet the requirements.
In 1990-91, 51 sugar mills were operating and utilizing up to 62.80 percent of total cane
production. The output of sugar was 1908838 tones and the recovery became 8.44 percent. The
operation of mills increased to 71 in the year 1998- 99 and decreased to 67 in the year 1999-
2000.It shows that four mills were closed due to financial crises. The cause of closure of these
mills might have been the lack of initial capital, which is imperative for transaction. This affected
the crushing capacity as well as output/production of sugar during the year 1999-2000. Such
declining output created sugar problems in the country.
Also, In 1998, the government introduced a three year ban in the construction of new mills.
However, 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 tons in 1996 and 716,000 tons in 2000 (12 percent and 21 percent of consumption
respectively), and surpluses of 417,000 tons in 1998 and 516,000 tons in 1999 (between 12 and
16 percent of consumption).
Despite all this most rapid growth in the industry was observed during the period of 90s mainly
because of liberalization, and easy credit policies translating into conditions conducive to private
investment. The other factor responsible for growth in industry was domestic manufacturing of
machinery and equipment. Before 1990, sugar production in Pakistan was insufficient to meet
even household consumption demand. But since then Pakistan has become self-sufficient in
producing sugar and was now capable of producing a surplus.
Exports in the 1990s have fluctuated Sugar Industry in Pakistan – going from zero in 1990 and
1991 to 778,000 tons in 1998, which followed the zero exports of 1997. Imports in the same
period have fluctuated from 367,000 tons in 1990 to 869,000 tons in 2000, over 480,000 tons in
1996 and 1997, but less than 6,000 tons in 1994, 1995 and 1999.

2000-2015:
In early 2000, our installed capacity went over and above the production by a significant amount,
where 10 out of the 78 mills didn’t operate in the 2000/01 season, thus keeping the production
low. While later we could increase our production till 2008 with a serious dip coming in 2004-05
majorly due to declining returns, lower sugar recovery levels and higher cost of production.

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Then again, in 2008-09 we had a severe decrease in sugar production due to reasons such as the
reduction in area harvested and yield, milling policies and practices, coupled with attractive
prices for alternative/competing crops (wheat, rice, cotton and sunflower) and insufficient
irrigation supplies in the country. However, throughout this decade of 2000s we see an increase
in the sugar prices majorly a supply shortfall globally. This was evident when the sugar support
prices went as high as Rs. 130 due to acute shortage of crop (40% less than the previous crop).
Similarly, 2010 was also followed with lowered sugar production due to the crop damages
resulting from deadly floods in this era.
Then with the gradual recovery of the crop post 2010 our production increased and during the
crushing season 2012-13, sugarcane production increased to around 61 million tons (crushing
season 2011-12: 58.6 million tons), depicting an increase of around 4.1%. Per industry experts,
the average sugarcane yield per hectare increased since sugarcane crop benefitted from
excessive rains, especially in the areas of southern Punjab and Sindh. Also, there was more area
bought under cultivation owing to the increased returns. Plus, timely available inputs, better crop
varieties and better sugar cane price as compared to other crops. After which our sugar
production has remained stagnated until recently. Though we are now able to export more sugar
since 2015.

2016-2017 (current scenario):

Following are some of the major macroeconomic facts about the current state of sugar industry
in Pakistan:

• Sugar industry in Pakistan remains the second largest industry after the textile.
• Its contribution to GDP is 1.9%
• About 1.5 million workers (skilled, semi-skilled, managerial) are directly associated with
it. The industry also provides indirect employment to around 4 million workers.
• The sugar industry contributes around Rupees 15 to 20 billion annually towards national
exchequer in shape of General Sales Tax (GST), federal, provincial and local taxes.
• This sector also has been contributing around 4 billion Rs direct under the head of excise
duty.
• It accounts for 8 percent of the total value-added in the large-scale manufacturing
industries.
• The sugar industry in Pakistan is pre-dominantly owned by the private sector, mostly in
hands of influential families, having political connections.
• The largest player in is the JDW sugar mills in terms of combined production capacity of
all its units.
Starting from 2 sugar mills at the time of independence, the latest research reports of having up
to 84 sugar mills in Pakistan (45 mills were in Punjab, 32 in Sindh and eight in KP) with our
production level reaching 65.45 million tons and the area under cultivation going up to
approximately 1.1 million hectares in 2016. The increase in area of sugarcane plantation in 2016

14 | P a g e
as compared to the previous year was due to non-attractive prices received by the growers from
other competing crops like Rice and Cotton. While the Per hectare yield of sugarcane in Pakistan
remains relatively low. Per experts, water shortages, a lack of high yielding varieties, and uneven
fertilizer and pesticide application contribute to lower yields.

Other than lowered yields we still face sugar shortages and crisis, despite being capable of
producing surpluses, mainly due to the underutilization of our installed capacities. Per the data
of 2008-2009 (the most recently available) There are around 81 sugar mills in Pakistan with an
estimated total installed cane crushing capacity of 600,000 tons per day (TCD), which is
equivalent to annual crushing capacity of 72 million tons (based on 120 days crushing season in
Pakistan). The annual sugar producing capacity (based on 8.6% national average recovery ratio)
is around 6.2 million tons, which is greater than the annual domestic consumption of 4 million
tons. Per an estimate, the sugar mills have capacity to produce 6 to 7 million tons’ sugar annually
The continuous increase in the minimum indicative price of sugarcane and resultant increase in
area under cultivation of sugarcane is putting upward pressure on price of sugar in domestic and
the international market which is facing a supply shortfall. Also, our higher than average input
costs have led to increased prices in Pakistan recently. Thus, the powerful millowners are
extracting revenues out of this spike in sugar prices in addition to receiving a huge monetary

15 | P a g e
incentive from the national kitty. The current government has provided over Rs10 billion in
bailout packages on the export of sugar.
Sugar industry in Pakistan has now entered an era of export orientation as it has been exporting
it for the last two years. Pakistan is producing surpluses and thus exporting sugar with the exports
being 293,541 million tons in the year of 2015-16.

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PORTER’S DIAMOND MODEL ANALYSIS:

Demand Conditions:
Pakistan is 9th largest sugar producer and 8th biggest consumer of sugar in the world. Total area
under sugarcane crop in Pakistan during 2012-13 was 1.17 million hectares with total production
of 66.5 million tons. Pakistan is the biggest consumer of sugar in South Asia with 24 kg per capita
per year consumption, while in India it is 14 kg, Bangladesh 10 kg and China 11 kg.

Pakistan also produces huge quantity of molasses and those were 2.1 million tons in 2012-13,
showing a bright export potential.
The demand of sugar in Pakistani domestic market continues to grow modestly, largely because
of growing population and a slowly developing domestic food processing sector. MY 2017/18
sugar consumption is projected at 5.0 MMT. Bulk sugar consumers such as bakeries, candy, ice
cream, and soft drink manufacturers account for about 60 percent of total sugar demand. With
the added protection of 40 percent tariff on imports, high market prices likely discourage a larger
increase in consumption.

17 | P a g e
The WHO guideline, published in March 2015, recommended that adults and children reduce
their daily intake of free sugars to less than 10% of their total energy intake, to fight against the
harmful effects of high sugar consumption on weight gain, obesity, non-communicable disease
and tooth decay. The ratio in Pakistan is around 15% which indicates alarmingly high rate of
consumption of sugar in Pakistan.
The anticipated growth in world sugar demand for the next decade is steadier with an increase
of 2% p.a. (slightly higher than in the previous decade, to reach 205 Mt in 2025) resulting in a
decrease of the stock-to-use ratio from 45% in the base period to 39% in 2025. However, the
growth in demand is mixed with nearly no growth in the matured developed countries and
stronger prospects in developing countries, particularly in Africa and Asia. In developing countries
with high sugar calorie intake, no noticeable changes in consumer habits are foreseen, as sugar
is an available, cheap source of energy, which is easy to transport and store.
During last several years Pakistan has also exported its sugar due to bumper crops. Like we have
been exporting to Afghanistan and several other countries. However, Pakistani sugar is not
competitive with the foreign market with the prices being 80% higher hence the government has
to provide subsidies to the exporters in order to make them competitive. During 2017 the
government allowed 225,000 metric tons of sugar quota to be exported.
Demand of sugar in Pakistan is expected to continue its rapid growth, driven by rising incomes,
urbanization and growing population.
The demand of sugar is inelastic due to less availability of substitutes and sugar being a necessity.
The demand in Pakistan usually soars especially during and before the month of Ramadan.

Factor Conditions:
In Pakistan, refined sugar is extracted by the sugar mills from two sources including sugarcane, and
sugar beet. In Pakistan about 90% sugar is extracted from sugarcane and 10% from sugar beet.

In Pakistan sugarcane is cultivated on about one million hectares; the average sugarcane production is
about 67.5 million tones. About 60% of the sugarcane is grown in Punjab, 30% in Sindh and only 10% in
NWFP. Our national average cane yield is 57.55 tones per hectares i.e. 57.75 tons per hectare in Punjab,
61.71 tons per hectare in Sindh and 45.68 tons per hectare in NWFP. The average recovery 9.85% is in
Punjab, 10.21% in Sindh and 8.75% in NWFP and the national average is 9.90% (PSMA 2014-15).
However, the situation in terms of cane yield and sugar recovery is better in Sindh as compared to other
provinces in Pakistan.

Sugar cane is cultivated in two seasons in Pakistan, during spring and autumn. Autumn crop gives high
sugarcane yield with more sugar recovery as compared to spring planted sugarcane

In the year 2015-16, as per figures provided by the crop reporting department of the Provincial
Governments, sugarcane was planted over an area of 1.131 mln hectares with a production of 65.451
mln tons. The increase in area of sugarcane plantation was due to non-attractive prices received by the

18 | P a g e
growers from other competing crops like Rice and Cotton as sugarcane being a cash crop has proved to
be more beneficial to the farmers.

The Sugarcane yield per hectare in Pakistan and the sugar recovery (sucrose content) is much less as
compared to other countries and even we have failed to achieve the potential of prevalent verities. This
is because of lack of adoption of modern technology for sugarcane production. Due to the rising costs of
farm inputs particularly of fertilizers and irrigation from tube wells There is a dire need to initiate an
extension program to make the farmers aware of latest production technology and a breeding program
to introduce new high yielding verities that are pest-resistant too, to make sure sugarcane cultivation on
sustainable basis.

The sugar recovery of cane of Sindh is better than that of Punjab due to soil conditions. Sugarcane is the
biggest source of revenue to the government because this crop fetches billions of rupees to the
government in the form of duties and taxes.

There is a small sugar beet industry in the higher elevations of Khyber Pakhtunkhwa. The crop has the
peculiarity of giving as much yield per acre as that of sugar cane but with 20-25 percent higher recovery
just in 7 months’ crop season. Thus, sugar beet ensures higher sugar production per acre per month.
However, it is not used in Pakistan on wide scale basis due to less availability of good quality beet root
due to unfavorable climatic conditions.

The sugar sector employs over 1.5 million people including management experts, technologists
engineers financial experts, skilled semi-skilled and unskilled labor. Around 11% of the total rural
population is employed in sugar industry. The rate of employment increases during the sugar crushing

19 | P a g e
season when additional labor is hired for various purposes. The labor in Pakistan is cheap, abundant and
easily available. Sugarcane harvesting is done by hand, which is labor intensive.

As of 2014-15, overall 25 to 30 percent of imported machinery was installed in the existing sugar
industry in Pakistan while the rest is locally manufactured. Moreover, 50 percent and 30 percent
imported machinery was installed in Sindh and Punjab, respectively. The machines that are generally
imported are turbines, turbo alternators and diesel engines imported from China Japan and Germany.

RELATED AND SUPPORTING INDUSTRIES:

Pakistani sugar industry is related to several other industries. These industries are directly or
indirectly related to sugar industry. Sugar Industry forms the basis for many important industries
like Gur, molasses, alcohol, sugar beverages, chipboard, paper, confectionery and provides raw
materials to mainly other industries such as chemicals, pharmaceutical, plastics, paints,
synthetics, fiber, insecticides, detergents etc.
The three, main by-product of sugar industry are Molasses, Bagasse and Press Mud. In Pakistan,
the utilization of sugar by-products has received almost no attention. It is estimated that if these
by-products were utilized fully, Pakistan would be able to earn about $300m annually.
Molasses constitutes around 3.5-4% of the weight of the cane crushed. Molasses is a dark colored
heavy liquid agricultural product. It is used in the fermentation industries to produce ethyl,
alcohol, denatured spirits, rum, yeast, fertilizers and for livestock feeding all over the world.
Almost 85% of it is exported in raw form. If all molasses is converted into alcohol, the country
could earn more foreign exchange through its exports; or if blended with gasoline will provide
gasohol, thus reducing oil imports.
Bagasse constitutes around 25-30% of the total crushed cane. Bagasse is the fibrous material left
after the juice has been extracted from sugarcane. It is utilized in the sugar industry itself as fuel
for generation of steam to run the boilers. The surplus bagasse can be utilized in processing it to
make hard boards, cartons and chip boards, for making pulp for manufacture of soft board and
tissue paper, as a raw material for Medium Density Fiber Board and using this MDFB to make
light furniture. It is also used to make animal feed all around the world. The sugar industry has
failed to produce electricity from bagasse. Currently, the amount of bagasse produced by sugar
mills has the potential to generate between 2,000MW to 3,000MW, depending on the plants per
day crushing capacity. But contrary to that they are supplying only 145.10MW to the national
grid.
Since sugar is also used in preparation of medicines; pharmaceutical industry is also closely
related with the sugar industry. Sugar is one of the main raw material of the pharmaceutical
industry.
Apart from these industries, sugar industry is also closely related to confectionary industry mainly
used for production of biscuits, cakes, sweets chocolates and other confectionary items. Any
increase in demand of these products increase the demand for sugar.

20 | P a g e
The soft-drinks industry is also a supporting industry for the sugar industry as they form a huge
portion of demand of sugar industry.
The cost of transporting sugarcane from the farm gate to mills is quite high, owing to the multiple
transport facilities and time-consuming activities involved in delivery process. This is the reason
that transportation industry also plays a huge role in sugar industry development.
The total transportation expenditure was estimated at 16,079 million rupees for the crop year
2007-08. The average cost per transaction incurred by farmers (excluding other labor costs) was
in the range of Rs.250-262.5 per ton in 2007-08.

Government:
The country sugar policy to date has been characterized by often-conflicting goals, which include
achieving self-sufficiency in sugar production, ensuring the availability of sugar to consumers at
affordable price and raising government revenues by taxing sugar production. To achieve self-
sufficiency in sugar production, the government has maintained high support prices for
sugarcane and provided protection to the domestic sugar industry by imposing tariffs and other
controls on the import of sugar. The sugar industry has also been subject to high taxes that over
time have become an important source of the government revenue.

Pakistani sugar industry used to work on zoning policy which bounded growers to supply cane
to the mills within their region. The zoning policy was ended in 1980s when the new industrial
aspirants opposed these. Managers opposed the de-zoning policy as they considered the zoning
system to be beneficial for both the farmers and millers. Regarding zoning the farmers stood on
a different foot than the managers. They believed that if zones were developed again they will
further be dependent on a single mill and hence probability of their exploitation will increase.

The Government of Pakistan adopted the National Sugar Policy 2009-10 with the main aim of
assuring supply of sugar at competitive price to consumers simultaneously providing a fair deal
to the producers and growers.

Governments, both at the Federal and Provincial level, are key players in the balance of the sugar
industry and its market. The provincial governments fix a ‘support price’ for sugarcane; this price
is the bare minimum that should to be paid to the farmer per 40 kg of sugarcane. This ‘support
price’ is based on the ‘indicative price’ set by the Federal Government. This indicative price is not
a definite number but a price range. This range is based on several factors which the provincial
government considers while putting in the ‘support price’. For instance, the cost of production
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of sugarcane, average wholesale prices of sugar, prices received by cane growers in the last year,
import parity based on average FOB London price of white sugar, export parity based on average
FOB London price of white sugar and an average of all the figures taken into consideration

The indicative price is submitted with considerations such as the aim of protecting growers’
interests as well as to not discourage cultivation of other crops by keeping a very high indicative
price. To reach an efficient concluding price range or price it is important that the study
conducted by branches of the Government is done in an “independent and credible manner”
otherwise the ‘support price’ will fail to accord protection to the grower’s interest. It was
admitted by the Government of Punjab during the investigations by CCP that no specialized
exercise was done to arrive at the ‘support price’ the same situation persisted in other provinces.
The data is usually provided by PSMA and there is no definite or credible basis for verifying the
genuineness of cost-related data presented.

It was clearly specified in the National Sugar Policy that the price of sugarcane is to be set per
sucrose content instead of weight. It was announced that the “mechanism of pricing sugarcane
on sucrose content shall be introduced in all the provinces.” In all other countries, the price of
sugarcane is determined per the sucrose content in sugarcane; however, in Pakistan the price of
sugarcane is affirmed per its weight. The pricing, per weight of sugarcane treats crops of varying
quality in the same manner violating principles of a market economy that bring efficiency.

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 1990-1998, another 31 mills came on
line. In 1998, the government introduced a three-year ban on the construction of new mills to
protect the cotton industries as farmers had started switching to sugarcane from cotton and
other food crops due to high profitability and increasing number of sugar mills. This ban is still
imposed in Punjab whereas Sindh government, though not explicitly imposed a ban has made
the entire procedure of getting NOC from the government to set up a sugar mill very difficult.
This has protected new entrants from entering the industry. Apart from the ban the relocation
of sugar mills to cotton areas was also prohibited in 2006.

The Sharif government, to relocate their family’s sugar mills to Muzaffargarh and Rahim yar Khan
issued a notification on December 4 2015, which allowed the owners of Chaudhry Sugar Mills,
Ittefaq Sugar Mills in Sahiwal, Haseeb Waqas Sugar Mills in Nankana Sahib, Abdullah (Yousaf)
Sugar Mills in Sargodha and Abdullah Sugar Mills in Depalpur to move the units to other districts.
This issue was taken to the court by Jahangir Tareen (owner of JDW sugar mills) and other mill
owners because of issuing the policy based on mala fide intentions and not taking into
consideration the environmental concerns.

The Lahore High Court on 2nd March 2017 ordered immediate sealing of Haseeb Waqas sugar
mills and Chaudhry sugar mill, believed to be owned by the ruling Sharif family and their close
relatives, because violating the relocation policy of the government.

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To encourage research and study the Government had assigned the Province Agriculture
Research Institutes to study and verify, with cooperation from the private sector, the best suited
varieties of sugarcane in the area. To achieve high yield and high recovery characteristics two
dedicated projects were to be set up by the Ministry of Food and Agriculture. It is important to
note though that the Ministry of Food and Agriculture has been devolved under the 18th
Amendment, where these projects have been diverted is a question yet to be investigated

Pakistan's sugar mills, mostly owned by the country's political elite, have enhanced their
production capacity beyond demand in the local market, which lured the farmers to grow more
sugarcane then other crops, including cotton. Agricultural experts have warned of dire
consequences of any move that leads to encourage sugarcane cultivation beyond normal range.

Due to surplus production, the sugar industry got permission from the government to export the
abundant sugar. The government had to subsidize them by reducing FED duty and providing
rebate on exports because the cost of production of Pakistani sugar is substantially higher than
the international prices. These induced millers to export more and more.
In December 2016, the Economic Coordination Committee (ECC) of the Cabinet decided to export
225,000 metric tons of sugar. Sugar price recorded more than three percent increase and gone
more than Rs66 per kg in the country since the government allowed its export despite of the fact
that earlier, the PSMA had assured the government for not increasing sugar prices after exporting
the commodity. The increase in price was because that millers started exporting more to achieve
higher profits in terms of rebates and subsidies and at the same time the domestic supply
decreased, increasing the prices and subsequently the profits to the millers.

Sugar millers have started a misleading campaign to get permission for the export of one million
tons of sugar by blackmailing the government in the name of surplus production and payment to
the growers. Most of the mills are owned by the political elite of the country therefore it is widely
expected that the collected amount, of up to Rs 65 billion, is likely to be spent on upcoming
election campaigns. Four years ago, the prices of cane were Rs 180 per 40kg while the price of
sugar was Rs 48 to Rs 50 per kg. However, since the last four years the price of sugarcane has not
increased but the price of sugar has shot up to Rs 65 in the market. If the price of cane has not
changed and the price of sugar has increased by more than Rs 13 per kg, it means the millers are
drawing Rs 13 unfairly from customers.

The government tries to protect the sugar industry by imposing high tariffs on the imports The
Economic Coordination Committee (ECC) of the Cabinet, under the chairmanship of Federal
Finance Minister Ishaq Dar, increased import duties on sugar from 20% to 40% in 2015 to
discourage decline in their prices. This increase made sure that the local industries were
supported and no sugar was imported due to high prices.

Chance:
The chance factor can be attributed to bumper crop in a season due to favorable climatic
conditions or high sugar recovery from sugarcane. Moreover, droughts can also have a negative
impact on sugar cane production. The growth of sugar cane is also dependent on rainfall which

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particularly happen in summers, any reduction in rainfall can also contribute to low yield of sugar
cane production. Sugar production in MY 2003/04 decreased to 3.56 million metric tons (MMT)
due to shortage of water for agriculture use. Similarly, in 2010, sugar production decreased
significantly due to crop damages resulting from deadly floods in the province of Sindh and
Punjab.

Firm Strategy Structure and Rivalry:

Sugar industry is one of the oldest industries of Pakistan and is currently in its maturity phase.
There are around 84 sugar mills currently operational in Pakistan including both public and
private. In Pakistan, most of the sugar mills are owned by some political families and more than
one sugar mills belong to certain political families.
The installed capacity of the industry is around 7 mln tones but the industry operates below the
capacity.
The market leader is JDW sugar mills which is owned by Leader of PTI Jahangir Tareen having 8%
of the total market, followed by 6% of Hamza Sugar mills and 3% Dherki and others. The
remaining 69 sugar mills occupy 74% of the market share.

Market Share

JDW
8%
6% Hamza
3%
3% Dherki
3%
3% Tandlianwala
Sheikhoo
74%
Etihad
others

Since the product is homogenous and a necessity there is a very little or no marketing need in
the industry. Hence the marketing costs are negligible. Due to homogeneity of the product, there
is no product differentiation or brand loyalty in the minds of users. This is the reason why the
firms in sugar industry do not follow product differentiation strategies but rather focus on cost
cutting strategies to bring down their cost of production lower.
Due to large number of firms in the industry the rivalry is high. Firms having better plants and
access to better recovery cane gain competitive advantage over the ones having old or redundant
machinery or low quality cane supply.
Due to high protection barriers by government, the industry does not face any direct competition
from foreign rivals, even though its cost is significantly higher than the international prices. The

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 government has imposed a 40% tariff on import of sugar to provide protection and boost to the
local industry.

PORTER’S FIVE FORCES MODEL:

1) Entry and Exit Barriers: High.

There are high barriers to entry in the sugar industry. The main reason of this is the imposition
of ban on establishment of new sugar mills and relocation of the existing ones by the
government of Pakistan. The notification was passed on December 6, 2006. Due to increasing
number of sugar mills in the country the government imposed a ban on the setting up of sugar
mills to protect the industry as the already existed mills were not working at their full potential.
The mills have never utilized 100 per cent of their crushing capacity because of unavailability of
sufficient sugarcane and the quality is also low. The government was of the view that sugarcane
crop was affecting food security and the textile industry since most of the cotton and wheat
growers were shifting towards sugarcane due to higher profitability. Also, as per law in Sindh,
the provincial government is empowered to issue a no-objection certificate (NOC) for
installation of a new sugar mill or enhancing the crushing capacity of existing mills. And to get a
NOC is difficult if you don’t have political backing. However, the Shahbaz Sharif government’s

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 recent attempt to quietly violate a decade-long ban on the establishment of new sugar mills
and relocation of existing ones in the province highlights the way policies and regulations are
changed by rulers for private profit at the cost of public loss.
To further mention, the industry is capital intensive that is it requires a lot of capital to invest
which restricts new entrants and 30% of the machines also need to be imported thus imposing
high costs. It requires a lot of money to set up a new mill and then wait for years to earn
positive returns.

2) Level of Rivalry: High. There are almost 84 operating sugar mills in the country and because
there is no product differentiation, sugar being the same product that every firm is selling, firms
compete on the strategy of minimization of cost. Hence, the sector faces a lot of competition
between the operating firms.
Though a few years back the CCP reported that cartel was observed in the sector and PSMA was
held responsible for creating this cartel. Some of the firms were working in a “closed and
protected” market instead of competing fairly. This strategy was “collusively and collectively”
managed by PSMA. Also, a buying cartel was observed in which the mills colluded to ensure a
collective sugarcane pricing and purchasing policy. These decisions were communicated,
coordinated and implemented by PSMA. After CCP reported, some of the firms took stay orders
because the matter is yet to be finalized by the High Court, Supreme Court follows up with the
decisions made by the High Court.
Although CCP suggested the government to act against the mills involved in collusion, the
government didn’t take any definitive action due to political pressures.

3) Bargaining Power of Buyers: Low.

The bargaining power of buyers is also low the reason being that the demand of sugar is income
inelastic which means that the disposable income has little or no effect on the demand of sugar
since it is a necessary household commodity. Pakistan is a sugar consuming nation with per
capita sugar consumption being 25 kg/year (highest in the region) this also adds to the
inelasticity of the sugar demand. Consumers don’t ask price before buying!
Moreover, there are few substitutes of sugar available (Gur, honey etc.) these substitutes are not
close substitutes of sugar hence the buyers have low power to exert on the mill owners. Over the
past few years, consumption of sugar by the processed food sector (soft drinks, fruit drinks, dairy,
traditional sweets and confectionary) has witnessed a significant increase. These industries
account for around 60% of the demand of sugar sector. Apart from the confectionary industry,
pharmaceutical and chemical industry also buy bulk amount of sugar and molasses respectively
from the sugar industry.
Another factor that reduces power of buyers is that the industry has always had political backing
due to which millers are often able to pressurize government to take actions which benefit them
the most even at the expense of the consumers. There is no such thing as product differentiation
or brand loyalty.

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4) Bargaining Power of Suppliers: Low.
The bargaining power of suppliers in the sugar industry is low since the millers mostly belong to
the government corridors. With the help of their power and influence they can pressurize
government to make the policies which are in their favor. Moreover, once the suppliers have
grown sugar cane they have no way or option but to supply it to the mill owners or else their
crop would suffer since the shelf life of sugar cane is very low. Sugar mills have also historically
delayed/deferred or curtailed the payments to sugar growers on basis of false liquidity crisis.
They use this crisis as a basis of subsidy from government on exports. Due to the end of zoning
policy, millers are now free to purchase sugarcane from anywhere around the country, this has
supported the growers a little. The government tends to support farmers by introducing
minimum support prices, however, the millers have always been complaining to government
about the support prices being too high. Another show of miller’s power can be observed when
they pressurized the government to increase the deadline of export subsidy to mint illegal
profits. Moreover, the cane prices since last 3-4 years have been constant i-e around 180-182
Rs/40 kg whereas the prices of sugar have reached up to 68 Rs, showing an increase of 13 Rs
during last 3-4 years. This shows that the millers are making profits while the farmers are not
getting profits in the same proportion. Considering all these facts it can be said that the
suppliers have little power as compared to the mill owners.

5) Threat of Substitutes: Low.

No perfect substitutes. But if we look in a broader sense, people might use Gur instead of sugar
but because of the increasing availability of sugar at competitive rates and developing taste
people don’t prefer Gur. Gur is confined to rural towns like in Khyber Pakhtunkhwa for making
particular type of sweets but even there we see a downward trend. It was previously used in
Punjab but due to modernization the consumption for sugar has increased and we see an
increasing trend in the demand of sugar. Gur is also made from sugar cane but still sugar is
preferred because the number of by-products in the sugar manufacturing process is high mainly
bagasse and molasses. Even the consumers of processed food sector, confectionary items and
the soft drinks companies can’t find a competitive sugar substitute. Honey can also be thought
of as a substitute to sugar but because of changing lifestyles, preferences and tastes people
prefer sugar over honey! Diabetic patients may use calorie-free sugar (e.g. Sucral) but because
of such patients being low and the trend of using such sugars being uncommon as well we
cannot say that there exists a perfect substitute of sugar.

27 | P a g e
SWOT ANALYSIS:
We observe that the “sugar industry” of Pakistan is the second largest industry of the country,
because of this status it is very important to do the SWOT analysis of this industry.
STRENGTHS OF THE INDUSTRY:

The first strength of this sector is that Pakistan is the 5 th largest cane sugar producer, 7th largest
producer of sugar and 9th largest exporter of sugar as of 2016. This shows that this sector earns
very high foreign exchange for the country.

The second main strength observed of the industry is that it pays 24% of its price to the
government in terms of taxes and excise duty and hence is one of the sectors which produces
very high tax revenues.

One of the strengths of this sector is the provision of employment. Since sugarcane is a labor-
intensive crop, it requires about 134 man-days/hectares. Sugarcane cultivation provides partial
and seasonal employment to 3.9983m people approximately, which is about 12.14% of the total
agricultural labor force.

The by-products that come from synthesizing sugar are of high value for other industries and
hence are included in the value addition areas of Pakistan. These products earn high revenues
and contribute to the tax revenue of the state.

The shifting of farmers from the cotton and rice crops to sugar production because of the
Minimum Support Prices (MSP) set by the government also strengthens the sector.

Availability of cheap labor contributes to the low cost of production for the manufacturers which
in turn generate high profits for the firms, and makes this sector one of the most profitable
sectors to invest in.

The high domestic consumption pattern is also a strength for the industry as Pakistan is the 8 th
largest consumer of sugar as of 2016. Hence this sector can attract FDI.

28 | P a g e
WEAKNESSES OF THE INDUSTRY:

The government monitors 80-85% of the costs. Most of the sugar producers complain that the
government does not increase the sugar price in the same proportion as the support prices of
sugar cane and other costs. This has eroded the profitability levels of the mills and has caused
severe liquidity problems. It is indeed only a small amount that the sugar-mill owners get out of
their handwork. Hence the sugar industry can be best defined as a fully regulated industry.

The transportation costs contribute a large part of the total cost in this industry. The road
network around the mills is not good despite paying the road cess. Delay in transportation is of
serious concern since it affects production costs, which are eventually reflected in consumer
price. The cost of transporting sugarcane from the farm gate to mills is quite high, owing to the
multiple transport facilities and time-consuming activities involved in delivery process. Because
of this the total production cost of the manufacturers increase.

Lack of RND in the sector has led to the lack of technology and modernization in the sector. Take
an example of India, it has 4000 laboratories while Pakistan only has 4 laboratories. The lack of
Research and Development in this sector leads to inefficiency and poor quality of sugar produced.
This in turn, increases the total cost of production for the manufacturers.

Low sugar recovery percentage due to variety of sugarcane that have low sucrose content and
are not resistant to diseases and pests. In an analysis done over 15 years it was found that Sindh
had relatively better sugar recovery than other provinces, due to suitable weather conditions.

As sugarcane is a Kharif crop, it needs a lot of water for its timely production. Adverse
performance of the sugar industry due to unavailability of water causes the millers to install tube
wells which increases the operational costs for the firms and hence makes this industry
uncompetitive.

29 | P a g e
The de-zoning policy of the government has demotivated the millers to allocate resources to the
growers, to improve the sugar cane quality in their area. Because this policy permits the grower
to take his sugarcane to any mill irrespective of the firm which gave him money in the first place.

Per hectare yield of sugar cane in Pakistan is quite low regionally and globally. The basic reasons
given for this problem are water shortage, lack of proper usage of pesticides and insecticides etc.

The support prices paid by both low and high sugar cane recovery areas are same. This makes it
hard for the low sugar cane recovery areas to compete with high sugarcane recovery areas, due
to significant difference in the profit margins of the two.

OPPORTUNITIES FOR THE INDUSTRY:

Sugar industry can increase their revenues by investing in power co-generation projects using
the by-product from the production of sugar i.e. bagasse.

Sugar industry can earn greater foreign exchange by tapping and exploring the unserved markets.
As of 2016, the world sugar consumption is greater than the total sugar production due to this
factor Pakistan can avail the opportunity of exporting sugar to the untapped markets of the world
and increase its revenues manifolds!

The per yield production can be increased by introducing new technologies and encouraging the
use of fertilizers.

The export of molasses in the future can earn Pakistan a lot of revenue from this sector hence
the industry has an opportunity to export ethanol and generate profits!

Proper development of industries that use the by-products produced by the synthesis of sugar is
an opportunity for Pakistan to utilize the by-products. This will also prove to be profitable for this
sector and the country as a whole.

In Brazil, 95 per cent vehicles are now fueled by “ethanol” produced from sugarcane where
petrol (gasoline) used is ‘gasohol’ containing 22 per cent ethanol. Just like Brazil, Pakistan has
an opportunity to blend the fuel ethanol with petrol and use this mixture as a fuel. This will
reduce the import costs of fuel incurred by the state.

We can shift towards beet production as it is relatively cheaper and will increase the total
profits for the sector. Thus, generating more revenue for the state!

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THREATS TO THE INDUSTRY:

The production of sugarcane decreases the productivity of land, this can lead to a shortage in the
production of sugar in the future!

As the production of sugarcane requires a lot of water, an increase in the production of sugar
may lead to shortage of water in the future!

Exogenous factors like flood, pest attacks etc. are a major threat to this industry. As this industry
is directly associated with the production of sugarcane, and the production of sugar cane is
directly linked to the availability of water and optimal usage of pesticides, such incidents
adversely affect the production of sugar cane and in turn affect the industry!

Smuggling of sugar is also a major threat to the domestic industry of Pakistan. The sugar imported
is cheap and can easily replace the sugar produced locally!

Artificial shortages, cartelling and hoarding is also a potential threat to the competitiveness of
this industry! This will lead to a reduction in the power of the buyer and increase the prices of
sugar.

My Idea :
My company idea is to fill the market gap and produce ethanol from the by-product of sugar
that is bagasse. Sugarcane is currently the most efficient raw material used in the production of
biofuels in the foreign market. Ethanol, its derivative, reduces greenhouse gas emissions by up
to 90% compared with conventional fuels. Sugarcane can also be used as a raw material for
next-generation biofuels, such as biobutanol and sugarcane diesel.

Sustainable, competitive, differential advantage of my company and product:

By 2035, global energy consumption is expected to grow by 32%, and the demand for liquid
fuels is forecast to increase by 18%, just over 15 million more barrels per day. The world’s
population is expected to rise to 8.7 billion, meaning there will be 1.6 billion more people
requiring energy.
These projections raise some fundamental questions. Are we able to meet the growing demand
for energy? How can we confront climate change if we depend exclusively on fossil fuels to
meet this increasing demand?

This is where biofuels can help. Over the next two decades, biofuels should represent 20% (in
energy) of the growth in transport fuels.

31 | P a g e
I’m convinced that a significant increase in the use of biofuels, produced responsibly using
carefully selected raw materials, will help to reduce global emissions of greenhouse gases.
A range of initiatives are being launched around the world. The European Union has committed
to reducing its general emissions to a minimum of 20% below 1990 levels by 2020. One of the
ways it intends to meet this objective is by raising the percentage of renewable fuels, including
biofuels, to 20% by 2020. The Unites States plan to increase biofuel consumption from 9 billion
gallons in 2008 to 36 billion in 2022 (1 gallon contains 3.7854 litres).
Biofuels currently account for 2.5% of transport fuels. In 2035 this number is expected to
increase to 4%. As well as increasing safety in energy supply and encouraging improvements
and innovation within agriculture, we are convinced that this increase in biofuel consumption
will lead to a reduction in the CO2 emissions associated with road transport.

The discussion on the sustainability of biofuels has attracted a lot of attention over recent
years. There are doubts as to whether land use for the cultivation of biofuels will affect food
supplies, if biofuel raw materials contribute to water shortages or soil erosion or if rises in
biofuel consumption really do produce significant reductions in greenhouse gas emissions .

Therefore, faced with the growing global demand for energy and the parallel need to reduce
greenhouse gas emissions, I believe that biofuels have the potential to fulfil my mission to
supply energy to the world in a safe and responsible way.

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CONCLUSION:
To conclude all the above data, we can say that Sugar industry of Pakistan has a great potential
to reach new heights if major steps are taken into consideration by government in this respect.
Especially in exports we can do so much better than we are doing right now but government
needs to lower the prices by taking different measures so that we can compete in international
market and generate greater revenues. Other than producing Sugar we can also produce
Ethanol which has been proved to be very helpful in developing economies. Yes, no doubt it’s
not an easy task to do but there must be a start. If appropriate steps are taken by our
government and the industry leaders themselves, there is a good chance that our Sugar
industry will always stand strong.

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REFERENCES:

1. http://tns.thenews.com.pk/no-sugar-policy-in-pakistan/#.WQ3lzml97IX
2. http://tns.thenews.com.pk/no-sugar-policy-in-pakistan/#.WQ3l0ml97IX
3. http://dailytimes.com.pk/business/26-Jul-16/ban-on-new-sugar-mills-lawful-supreme-
court
4. http://par.com.pk/news/ministry-recommends-exporting-million-tons-sugar
5. http://par.com.pk/news/sugar-industry-unhappy-over-low-prices
6. https://www.pakistantoday.com.pk/2016/12/28/ecc-allows-sugar-exports/
7. http://par.com.pk/tag/sugar-export
8. http://psma.pk/
9. http://www.ravimagazine.com/sugar-industry-of-pakistan-an-academic-report/
10. https://www.dawn.com/news/1314131
11. http://fp.brecorder.com/2017/03/20170321156622/
12. https://www.dawn.com/news/1318349
13. https://www.dawn.com/news/1273260
14. https://www.dawn.com/news/1313750
15. http://newslinemagazine.com/magazine/a-sweet-story/
16. http://tns.thenews.com.pk/no-sugar-policy-in-pakistan/#.WQ3nl2l97IX
17. http://dailytimes.com.pk/business/21-Mar-17/sugar-turns-bitter-for-pakistanis-as-
millers-make-illegal-profits
18. https://www.forbes.com/global/2010/0118/companies-pakistan-sugar-mills-
association-sweet-agony.html
19. https://www.dawn.com/news/208806
20. http://par.com.pk/news/rights-of-sugarcane-growers-will-be-protected
21. http://www.customstoday.com.pk/tag/pakistan-sugar-mills-association-sindh-zone/

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ANNEXURE:
Interviewee: Mr. Khalid Hayat -Chief Operating Officer Faran Sugar Mills
Interviewer: Syeda Hafsa Maruf
Interview Date: 26th April 2017

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