SQM PROJECT

ARTICLE SUMMARIES
SECTION L

SUBMITTED TO: MAAM AMBREEN KASHIF

SUBMITTED BY: MINAHIL NAVEED 20U00075
SALEHA MEHMOOD AWAN 20U00364
ALIZEH MOBIN 20U00359
UME ABEEHA 20U00193
BISMA NADEEM 20U03007
 Article 1
Name: The Sugar Industry of Pakistan—Understanding Structural and Regulatory
Underpinnings of the Current Sugar Crisis
Authors: Abdullah, Chief of Research, PIDE, Madeeha Gohar Qureshi, Research
Economist, PIDE, Omer Siddique, Senior Research Economist, PIDE and Uzma Zia,
Senior Research Economist, PIDE
Publication Year: 2020

Summary
Pakistan stands at number 7 in rankings in terms of both sugar production and export. Since
2010-11, Pakistan consistently has surplus sugar production and has earned USD 2.3 billion
through exports. This article highlighted the; sugar crisis such as export subsidy on sugar and
dynamics of sugar industry. In Pakistan, mainly the sugar mills cartel controls the sugar
industry, therefore it is a challenge for the government to minimise the probability of
cartelisation. It is generally believed that the sugarcane production is taking over the cotton
crop area and is expanding to fulfil the need of sugar mills at the expense of the cotton and
related industries. However, if we see the history trends, they don’t support this claim, cotton
is declining primarily because of the increase in the area under maize and rice cultivation and
not because of an increase in the area under sugarcane cultivation. Low productivity and low
profitability make cotton production uncompetitive which concludes that the increase in
sugarcane production is not responsible for the decline in cotton production. The article
further explained the causes of growth in sugarcane area which included support price and
climatic conditions. Support price has not contributed to the expansion of sugarcane
production area. Rather, it is only a benchmark against which the actual price can be gauged.
Sugarcane is more resilient against extreme weather conditions so both these 2 factors allow
it to be a less risky crop which ultimately drives its growth. A common perception exists that
sugarcane is a water-intensive crop but estimates show that sugarcane is highly water
efficient because the amount of water required to produce 1 kg of raw cotton can produce 8.6
kg of sugarcane. Protection through regulatory distortions is required to get the industry to
flourish and survive. The majority of distortions in the system protect the interest of sugar
mills only so they exploit farmers by offering lower prices because of the absence of
competition across mills. In this way sugar mills get advantage, secondly barriers to new
entries and a 40% customs duty on sugar imports creates economic distortions in favour of
sugar mills. In 2019 sugar crisis such as the announcement to increase sugarcane support
prices was made at a very late stage so higher area for sugarcane could not be achieved.
Similarly, in the presence of strong signals of increasing prices in the local market, the
government reacted slowly to cancel the export permit, which caused sugar crises in the
country. The article concluded that some countries mainly earn from sugar by-products,
which have comparatively high international prices than sugar. In these countries, sugar is
treated as a by-product and sold at a low price. Pakistan has heavily protected the sugar
industry, which helps domestic sugar industry to compete in the international market by
developing sugar by-products.
 Article 2
Name: Sugar Industry in Pakistan, Challenges and Opportunities
Summary
The research article SUGAR INDUSTRY IN PAKISTAN CHALLENGES AND
OPPORTUNITIES was published in January 2019 by Abbasi Securities. This particular
article revolves around the sugar industry, its challenges, different types of sugar mills, by-
products of sugar, and its import and exports. This article further discusses the production of
sugar in Pakistan as it is stated that Pakistan is the 9th largest producer of sugar. Sugarcane is
a high-value cash crop in Pakistan. Its cultivation has grown significantly over the years from
under 1 Mn hectares of area under cultivation in 2008-09 to over 1.3 Mn hectares in 2017-
2018. There are 89 sugar mills operating in the country with the majority i.e., 50%+ situated
in Punjab and around 26 of these are listed (actively) on the Pakistan Stock Exchange.
Depending on the production and requirement for domestic consumption the government of
Pakistan decides on the import-export of sugar. Since FY12, Pakistan has been self-sufficient
in sugar and in fact been producing an exportable surplus. The local industry is also protected
by a 40% import tariff. In addition to being a major source of sucrose for sugar production, it
is possible to obtain around 6-7 additional products and -products from sugar production
some of which are of high economic value. Baggage, Molasses, and Pres s Mud are the 3
high-economic value by-products while others such as green leaves and tops, trash, boiler
ash, and effluent generated by the industry try and distillery are of low economic value.
Furthermore, in this article, the production, financial statements profit, and losses of several
mills are discussed. There are some challenges faced by the sugar industry due to economic
and technical reasons but with effective planning and good utilization of resources, these
problems can be solved due to some extent.
 Article 3
Name: The Pakistan Sugar Industry its Current Status and Future Needs
Muhammad Awais Qureshi and Shahid Afghan Shakarganj Sugar Research Institute,
Jhang, Punjab Pakistan
Publication year: April-June, 2020
Summary
This study was important because Pakistan is a large producer of sugarcane but it still lacks
major advancement in production and marketing. Despite all efforts, sugarcane production in
the country is still much lower than most cane growing countries of the sugar world.
Amongst the many constraints responsible for low productivity, inappropriate plant
population, substandard method of cultivation, poor nutrition management, inadequate
irrigation water supply, and lack of plant protection practices are the major ones and need
immediate attention. We have 10 public research centre and 2 private centres working on
improving the situation from insect resistance, development of new cane varieties, agronomic
trials to workshops on R & D activities on sugar crops and technical training of scientists in
the country. Water availability for the sugarcane crop is mostly constant throughout time and
has even decreased in cane growing regions. Sugarcane output must be maximized by
effective management of water resources and their dependability. Anytime water becomes a
limiting element, both growth and yields are decreased. Practices like the addition of organic
matter in soil, use of stress-tolerant cane varieties, irrigation scheduling, land levelling, weed
control and drip irrigation would lead to a more profitable along with efficient use of water
will lead to a higher production of sugarcane. Nutrition Management, Racoon management,
pest management and biocontrol of insect pests are some other ways to improve production.
Example Biocontrol most efficient, economical and eco-friendly whereas its counterpart the
chemical control is hazardous and relatively costly. To get a good quality product we need
raw material of good quality i.e., to get good sugar we need to get good raw materials.
Recommendations were mentioned in this article which should only be implemented after
consideration. One way mentioned was the post-harvest loss as delay in crushing the can after
crushing it can result in sucrose losses and fresher juice means more efficient processing but
more research needs to be done. A premium product deserves a premium price, and provides
financial rewards to both farmers and mills. Pay for better quality. Establish a national
sugarcane research centre with assistance from the private sector and the government,
without strong R&D, a sector of the economy will eventually disappear. One way is to make
sure that the cane growing industry adopts the most recent technological advancements and
best management practices as soon as feasible and the other is using the existing knowledge
at best. Not all of these methods need to be used the firms need to consider what is best for
them.
 Article 4
Sugar
Sector Study
PACRA-April 2022
Summary
Asia is the largest producer for sugar. Where Pakistan produces about 3% of the sugar
production share. India has the highest share in the region of Asia. A rise in the prices of
Sugar have been observed during the last five years. The prices are expected to stay high for
the near future. Exports by Pakistan in the years 2021-2022 were 0 as mentioned in the
article. Pakistan’s economy is divided into three segments-Agriculture, Industry and Services.
Sugarcane is a cash crop of Pakistan. The level of government support given to the farmers
determines the planting decisions of the farmers and hence the crop yield. Sugar industry is
6% of the manufacturing sector of Pakistan. The growing population of the country has
increased the demand for the consumption of Sugar in the last five years. The exports have
decreased and the domestic consumption has increased due to the fact. The price of Sugar has
also drastically increased in both the domestic and international market. The demand for
Sugar is price inelastic as it is consumed on a daily basis. A slight decrease in demand was
observed during the pandemic due to the closure of the restaurants. A cyclic inventory level
for the production of Sugar is observed due to the recovery rates of the Sugar mills. If the
Sugar mills are efficient, they have maximum recovery ratio. If the Sugar mills are
inefficient, they have low recovery ratio and high conversion cost.
 Article 5
Annual analysis of Pakistan Sugar Mills Association
PSMA 2021-22
Summary
The article is about the sugar industry of Pakistan. It comprises of analysis on the current
situation of the sugar industry in Pakistan during the course of years till 2021.during the years
the sugar industry has faced massive problems starting when in 2021 the government mislead
information about sugar recovery is at 10.5% and commenced the 20 days early sugar
crushing which led to loss of 160 thousand tones sugar. And resultingly when the sugar was
not even allowed to be imported in 2020 June, there was a massive outbreak in prices the
middleman manipulated the sugar prices to increase. The article mentions about the sugar
price crisis as the high price of cane increased the cost of sugar despite only 25% sugar is
consumed by household and rest by industry which adjusts sales tax.it raised the need to
provide sales tax free sugar but govt forcedly acquired the sugar at 80 rupees when the actual
price was 95 and this caused massive loss in billions to the sugar industry. While in 2019-
2020 there was sugar enquiry as sales tax on sugar increased to 17%. Moreover, When the
govt exported the sugar that year it led to sugar prices decreased due to a surplus in sugar
stock. The result it became evidence that PSMA does not control the sugar prices it is market
sentiments that determine sugar prices. The main emphasis in article is that the subsidy
calculated in consideration to cost of prices to earn foreign exchange does not benefit most of
sugar mills instead only a few. While the subsidies stabilize domestic prices and ensures
timely commencement of crushing. Furthermore, one of the issues is that the sugar cane is
discussed that it is major crop and that is it cultivated around 1.5 million as compared to
wheat around 10 million so the early cultivation of sugar does not increase the production of
sugar. The other main issue that the disinformation continues and despite the documentation
to federal ministry. Sugar cane is seen as water guzzling crop while in reality the rice is water
consuming. Sugar cane is only crop that generates 700 tons of water for every ton cane
crushed. Out of which 400 used in sugar crystals rest is sent back to rivers after filtration. In
conclusion the sugar dealers have destroyed the local supply chain creating sugar shortages
leading to price hikes without there being factual shortage of commodity. Moreover, like the
wheat the sugar is considered the stapple food and govt increases the sales tax on it leading
price rises. Therefore, there is need of subsidized sugar to utility stores.
 References.

Article 1: -
https://pide.org.pk/research/the-sugar-industry-of-pakistan-understanding-structural-and-
regulatory-underpinnings-of-the-current-sugar-crisis-3/
Article 2: -
http://abbasisecurities.com/Sugar%20Industry-%20Challenges%20and%20Opportunities
%20(Abbasi%20Securities).pdf
Article 3: -
https://www.researchgate.net/publication/
348918351_THE_PAKISTAN_SUGAR_INDUSTRY_ITS_CURRENT_STATUS_AND_F
UTURE_NEEDS
Article 4: -
https://www.pacra.com/sector_research/Sugar%20-%20PACRA%20Research%20-%20Apr
%2722_1650878339.pdf
Article 5: -
https://www.psmacentre.com/documents/PSMA%20Annual%20Report%20Final
%20%202021.pdf