*Lifting exceeding production is from carryover stock.

Until March sugar price trend behaved normal in the international market based on sugar production in the global circuit indicated to be a modest surplus. Suddenly the report of crop in Brazil being adversely affected dropping during April 1999, influenced price rise in the international market. It was followed by news of lower sugar crop in the European Economic Community. Both being the major players in sugar processing, with 25 million and 21 million tons normal rollout a year respectively, reports emanating from the two of the crop deterioration set sparkling upward movement in sugar prices.

Pakistan was virtually, caught in unfavourable situation which shaped suddenly. Surplus sugar production in Pakistan during 1997-98 and 1998-99 coincided with the then global glut. Conversely, the review year fell in reverse gear in sugar production both at home and abroad. This gave shock price spurt trend in the global market. The weekly international sugar prices, given in statistical section, portray the unexpected turn it took and reveal sudden rise in sugar prices from April onwards.

The government of Pakistan faced with scarcity of foreign exchange, tried its best to contain the stress on this account. Rise in sugar prices at home was precisely consequential to the price trend in the international market, on which none could wield influence. However, in order to keep sugar prices in reach of the people of Pakistan all the available avenues were relentlessly explored by the Government of Pakistan.

The Government of Pakistan in the first instance reduced import duty of sugar by 10% to 25% on 23-6-2000 and later another 10% reduction was made in it. Finally, it was mere 15% duty left on sugar imports, in place of 35% earlier. The Government of Pakistan liberalised sugar imports. Keeping in view, rising prices and tendency to hold up supplies, the period of sugar retention in the bonded warehouses was cut to 30 days from 90 days. Efforts so combined cast salutary effect to some extent. The prices of sugar in the domestic market resumed cascading effect from Rs.19/= per kg. All told import of 420 thousand tons of refined sugar from April 2000 to September 2000 was of a tall order. It involved forex spendings of US$ 104.123 million. It indeed was ominous shadow. It ought to imbibe the sugarcane growers in squarely meeting the national demand for sugarcane and rise above board of self-centred interest and put up meticulous efforts towards higher yields and sucrose content in sugarcane crop. This alone can confer upon the growers real economic benefits, save the sugar industry from bedevelling high cost syndrome and manage for the consumers steady supplies of sugar at stable prices.

Sugar, by and large, is stamped of inelastic demand characteristic. Reduced sugar production in the country and globally set the trend of high sugar prices. Sudden emergence of rising sugar prices, however, proved the point held and pleaded all along by the PSMA, the authorities not to become exceptionally sensitive about sugar price alone. Invariably, it is the cost of production which should set a benchmark for price so as to protect national industrial structure from being ruined by disruptive onslaughts. Price of a product ought to be cost plus economic return on equity so as to make each project in its economic right viable. Sustainable economic existence at micro level and making it so on macro scale prima facie depends on efficient translation of this concept into action plan. PSMA has been pleading this principle relentlessly.

The overall sugar availability scenario in Pakistan was as presented on next page. It was not to be happy about it. It fared full of injury to developing countries, dependent upon sugar imports to feed their teeming million.

Sugar availability scenario
Season: 1999-2000
(Quantity in tons)