THE decline in sugarcane area and output in lower Sindh has triggered an upswing in demand which has pushed cane price to Rs200+ per 40kg in this crushing season, due to end this month.

Not only this, but these mills are also purchasing cane from upper Sindh at the same rate to meet their requirements.

Over the last few years the acreage has declined in the cane growing belt of Badin, Tando Mohammad Khan and Thatta. The drop is attributable to late cane crushing (mostly in late December instead of Oct-Nov) and the perpetual miller-farmer conflict of interests in setting the cane price.

Notwithstanding a brief suspension of crushing in December 2016 by Pakistan Sugar Mills Association in lower Sindh for want of adequate cane supplies, 35 mills are continue their operations now. Farmers and millers confirm that cane is being purchased from upper Sindh areas like Ghotki by mills located in lower Sindh at Rs220-230 per 40kg to meet their requirements. Ghotki has witnessed a steep rise in sugarcane cultivation (25,000ha in 2013, 50,000ha in 2015 and 2016) as growers there avoid growing cotton owing to inadequate market price of the crop.

Ghotki-based sugar mills, five in all, however, are offering an official rate of Rs182/40kg to local sugarcane producers as sufficient sugarcane is available in the area to meet their mills’ demand. These mills had, however, paid Rs180/40kg when the provincial government had fixed the price Rs172/40kg in 2015-16 season.

Consumers fear the price of sugar might increase in the month of Ramadan starting from third week of May as they allege market players are busy hoarding sugar stocks

Growers expect that the cane rate would increase at the fag end of this crushing season. They even don’t rule out a price of Rs280 or Rs290 per 40kg.

Abdul Majeed Nizamani claims that sugar recovery from cane will improve up to 12pc this season on account of late crushing. Colder winter, he says, always improves the sugar recovery.

He said higher cane rates would encourage sugarcane producers to cultivate more cane in the spring sowing season. Farmers, he says, had switched over to alternative crops in view of low sugarcane rate and controversy over sucrose recovery rate.

The Economic Coordination Committee (ECC) has allowed the export of 225,000 tonnes of sugar while anticipating a surplus of 1.23m tonnes. But sugar prices in local market continue to increase. It costs Rs60/kg if one buys 50kg. The retail price ranges between Rs62-64/kg.

Initial estimates of the Sindh agriculture department’s cane sowing in Oct-Nov 2016 show that 320,000ha were brought under cultivation. Farmers hope the shortfall in the cane area would be covered by 10-15pc in lower Sindh by the spring sowing time this year.

Sindh Abadgar Board Vice President Mahmood Nawaz Shah says international market price trends indicate that millers can export sugar even without seeking any official subsidy.

Consumers fear the price of sugar might increase in the month of Ramadan starting from third week of May as they allege market players are busy hoarding sugar stocks. Sugar’s wholesale price is already up Rs58/kg from 45 days ago to Rs63.60/kg, according to a retailer.

Published in Dawn, Business & Finance weekly, February 6th, 2017