Sugar woes

Published November 29, 2022

IT’S that time of year again when cane growers get anxious over the delay in the commencement of the new sugar harvest as manufacturers postpone crushing on one pretext or the other, while the government sits by watching the quarrel. For the mill owners, late cane-crushing means high sucrose content at a lower cost. Growers are worried that drying the water content would reduce the weight of the crop and affect their profits. This year, the manufacturers are reported to have refused to burn their boilers till such time the government allows them to export half of their unsold stocks of 1.2m tons from the last season. Their arguments cannot be tossed away. For starters, it is feared that the retail price of the sweetener, already under pressure, could crash if the harvest begins with a large inventory, besides increasing the costs of storing it. Then, they argue, that its export can fetch the dollar-starved country millions in foreign exchange.

The government appears undecided. While the finance minister is said to be in favour of permitting sugar export, the food security ministry is opposed to the demand as there is no way of independently verifying the carry-forward inventory. The food security minister believes that the export of the sweetener may lead to a spike in domestic prices (which will rise anyway because of higher-than-last year’s cane support rates) and, possibly, create shortages since the next harvest is likely to be shorter due to the flood-related damage to the Sindh crop. In the absence of complete data on crop output and the inventory being carried forward, it is hard to choose a side. However, it can be said, without fear of any contradiction, that the entire sugar supply chain will have to be depoliticised, the market forces encumbered, and free import and export allowed if these periodic issues are to be handled without any cost to the government, industry, growers and consumers. Unless the sugar market is deregulated, every player will keep demanding their pound of flesh.

Published in Dawn, November 29th, 2022

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