KARACHI, Nov 29: The chairman Pakistan Sugar Mills Association (PSMA) Ashraf W Tabani said on Thursday that the government will have to rectify its past mistake by striking a balance between demand and supply of sugar to ensure viability of the industry.

“The unbridled imports of refined sugar last season has created a glut like situation in the domestic market resulting in crash of prices to an extent that it does not even cover up production cost of the industry,” the PSMA chairman maintained.

Talking to Dawn here on Thursday, Tabani said that new crushing season (2001-2002) has started with a huge carry-over stocks of 6,20,000 tons. As a result of this, he said, sugar prices came tumbling down from Rs24 to Rs19 per kg.

Consequently, he said sugar industry’s operational viability has been totally eroded and there is no chance of price recovery during the entire current sugar season, starting from Oct 1, 2001 and will end on Sept 1, 2002.

With estimated sugar production during current season at 3.1 million tons and carry over stocks of 0.6 million tons the total available sugar stocks during the current season, he said, would be over 3.7 million tons.

After meeting domestic consumption of around 3.1 million tons, there would be a huge surplus of 0.7 million tons, Ashraf Tabani said. Consequently there stands no chance for the revival of sugar prices.

He reckoned that the sugar industry could not survive and therefore it is necessary that the government should rectify the situation which had been created because of its own wrong policy.

Even, if we take into account that major chunk of carry-over stocks of around 620,000 tons had been consumed during the past two months i.e. Oct and Nov, the current season’s production would be sufficient to meet domestic consumption, he maintained.

On an average, monthly consumption of sugar is at 260,000 tons and after deducting two months (Oct-Nov 2001) consumption from the carry-over stocks, a balance of 180,000 tons would still be available. Above all, he said, in November 2001, Sindh mills would produce around 80,000 tons of white refined sugar.

Tabani said in case of shortage, sugar industry could always start its next crushing season earlier by up to six weeks, which could greatly help to cover up any foreseeable shortage of sugar in domestic market.

The PSMA chief was critical of the government policy to allow import of cheap and heavily subsidized sugar from India in the last season which has threatened local sugar industry.

He said when the industry was asking for increase in import duty of sugar, the government instead resorted to a cut, which resulted in unbridled imports.

Ashraf W Tabani said the industry in order to keep itself afloat has demanded export of 200,000 tons only. However, the depressed prices of sugar in world market is making it difficult to compete and for this a subsidy was sought from the government.

Responding to a question, he said, almost all the 27 sugar mills in Sindh are presently under their normal operations, and an estimated production of one million ton is being targeted. He said that industry’s 80 per cent cost of production comprises cane cost which is now at Rs43 per 40 kg.