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Presented by: Muhammad Ovais Chhipa Shariq Tanzeem Misha Mallick


At the time of partition in 1947 only seven sugar mills, existed in the territories of Pakistan. Population and per capita increase always kept the demand high and number of sugar mills increased to 86 in 2009.

Pakistan has 86 sugar mills has the capacity of producing 7.0 million tons of sugar annually, indeed with full capacity utilization that would need supply of 80 million tons of sugarcane, the best being 53 million tons in 2007-08. The surplus installed capacity is causing concern particularly in low supply season. The total outlay at current cost is US$ 1.50 billion. Present annual sugar consumption of the country has crossed 4 million tons valued at US$1.8 billion.

Source: Pakistan Sugar Mills Association


The crops that are sown in the rainy season are called kharif crops. Sugarcane is a Kharif crop. Kharif season starts on 16th April and lasts till 15th October. Sugarcane is a part of the Agricultural sector which provides employment to 45% population. Because of inordinate spike in prices of major crops by Govt., an additional amount of Rs. 342 billion was transferred to the rural areas in 2010-11 contrary to Rs. 329 billion during the eight years. (2001-2008) Sugarcane is a cash crop in Pakistan and a major raw material source for the production of white sugar and gur.

Its share in value added in agriculture and GDP is 3.6 and 0.8 percent, respectively. Pakistan is an important sugarcane producing country and is ranked fifth in terms of area under sugar cultivation, 60th in yield and 15th in sugar production. Sugarcane is grown on around a million hectares and provides the raw material for Pakistans 84 sugar mills. Relatively, Kharif season 2010 faced more shortage of water than any other Kharif season since 2003-04.

During the current fiscal year (2010-11), the availability of water as a basic input for Kharif 2010 (for the crops such as rice, sugarcane and cotton) has been 20 percent less than the normal supplies and 21 percent less than last years Kharif season. Sugarcane production for the year 2010-11 is estimated at 55.3 million tons as against actual production of 49.3 million tons. 12% The Sugarcane benefited from excess availability of irrigation water. Almost all major crops breached the target except sugarcane where production exceeded the target.

It is a source of revenue to the Government of Pakistan by about Rs. 22.0 billion, to the growers by Rs. 110-135 billion and to the vendors, other contractors, transporters and suppliers by about Rs. 20.0 billion, beside providing direct and indirect employment to 1.20 million people particularly in the rural areas of the country. The sugar industry is the countrys second largest agro-industry after textiles. Besides its edible use, Pakistan also uses sugar to produce alcohol for medicinal purposes, ethanol for fuel, chip board manufacturing, etc.

Main factors contributing for more production are:


market prices of last years produce and Time availability of inputs encouraging the farmers to grow more sugarcane crop.
Sugarcane Production (000 Tons)
70000 60000

40000 30000 20000 10000 0


Unscientific/Unsystematic agriculture practice.

Improper selection of land. Improper preparation of land. Conventional planting methods. Late Planting Moisture Stress at critical stage of crop growth. Early and late harvesting. Poor Management of crop.

Environmental Resistance Low soil fertility Defective verities Pests, disease and weeds Credit shortage Rapid/ Unplanned increase in Sugar cane acreage in unsuitable areas of Pakistan.

The Federal government generally does not procure sugarcane, but it authorizes provincial governments to fix respective sugarcane prices in consultation with representatives of both the sugar industry and farmer organizations.

What is Support Price?

A price support may be either a subsidy or a price control, both with the intended effect of keeping the market price of a good higher than the competitive equilibrium level.


(Rs per 40kg)

Fiscal Year

Sugarcane Khyber Pakhtunkhwa





1991-92 1992-93 1993-94

1994-95 1995-96 1996-97 1997-98 1998-99 1999-00

16.75 17.50 18.00

20.50 21.50 24.00 35.00 35.00 35.00

16.75 17.50 18.00

20.50 21.50 24.00 35.00 35.00 35.00

17.00 17.75 18.25

20.75 21.75 24.50 36.00 36.00 36.00

17.00 17.50 18.25

20.75 24.50 36.00 36.00 36.00 36.00


(Rs per 40kg)

Fiscal Year
2000-01 2001-02 2002-03 2003-04

Khyber Pakhtunkhwa 35.00 42.00 42.00 42.00 Punjab 35.000 42.00 42.00 42.00 Sindh 36.00 43.00 43.00 43.00 Balochistan 36.00 43.00 43.00 43.00

2004-05 2005-06
2006-07 2007-08 2008-09 2009-10 2010-11

42.00 48.00
65.00 65.00 80.00 100.00 125.00

42.00 45.00
60.00 60.00 80.00 100.00 125.00

43.00 60.00
67.00 63.00 81.00 103.00 127.00

43.00 -

Khyber Pakhtunkhwa 2005-06 2006-07 48.00 65.00

% Change 35%


% Change 33%


% Change 12%

45.00 60.00

60.00 67.00

2008-09 2009-10 2010-11

80.00 100.00 125.00

23% 25% 25%

80.00 100.00 125.00

33% 25% 25%

81.00 103.00 127.00

29% 27% 23%


The Government of Pakistan supports cane production by setting a market minimum support price announced before or after planting. The support price is set below the local demand price. As a result mills renegotiate the procurement price. The crop price increases up to 50% whenever the crop cycle is at its low ebb. The sugarcane support price has increased from Rs. 40/- per 40 kg in 2004-05 to Rs. 80/- per 40 KG within the recent 4 years causing the sugar production price increase simultaneously.


Fiscal Year Sugar (Open Market) kg 11.26 11.62 12.29 12.91 13.74 16.76 21.25 19.54 19.09 21.11 Fiscal Year

(Rs/unit) Sugar (Open Market) kg 27.11 22.87 20.77 19.01

1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00

2000-01 2001-02 2002-03 2003-04

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

31.16 27.92 38.72 57.11 56.25 73.82

2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 July-March

Amount (Rs. in million)

153 189 5,229 37,336 15,722 912 4,505 24,731





Al-Abbas Sugar Mills Ltd. was founded in month of May in the year 1991. The sugar plant of AASML is spread over 133 acres located in sugar cane cultivation areas of Lower Sindh. 133 acres clearly show that huge amount of investment is required to Setup a Sugar Mill. Also, Sugar mills are setup near there is cultivation of sugarcane.


The AASML is currently acknowledged to be one of the most efficient plants in country. One of the unique aspect of plant is its being only plant in Sind to be equipped with a Cane Quality Laboratory. In 1997-98 AABSML became one of the only three sugar plants in Pakistan to produce sugar by meeting international quality standards of ISO 9002.


Pakistans largest Ethanol Distillery plant was installed by AASML in the year 2000. It is a major achievement of Al-Abbas Group as it has already paid substantial dividends to the company. Due to seasonal availability of sugar cane , manufacturing of sugar is carried out during period of availability of sugar cane.


During the nine months ended June 30,2011 AASML has earned profit after tax amounting to Rs.270.46 million as compared to profit after tax of Rs.158.798 million of corresponding period of last year. It means increase in profit is Rs.111.662 million.


During the period Ethanol Division produced 31,265 M.T ethanol as compared to corresponding period of last financial year of 27,505 M.T showing increase of 14% production.


The future of company depends on stable selling prices of sugar and ethanol. The sugar price of local and international market has shown slight improvement as compared to previous quarters.


AASML maintains interest in social uplift of residents in the area around plant. It has invested in several projects like : Building primary school of good standard Making medical complex Community library , computer training centre Tree plantation and nurseries

Recommendations to AASML

AASML should have 2,3 varieties at a time to manage harvesting according to maturity period. Special seed nurseries should be maintained to safe guard the variety from disease infection. AASML should have seed farms for seed multiplication under the supervision of research staff. AASML should allocate budget for seed multiplication on regular basis.


International prices of sugar are increasing. Current capacity is very low. Due to cartelization, the international products cant come to Pakistan. Increase in production cost due to increase in price of raw materials & energy.


Prolonged drought and heat stress decreased its production by 37% till 2001 Confrontation between growers and millers over price. Decreased production due to water shortage, behaviour of the mills management, late payments, increased input cost, and diseases and rodent attack. Constraints faced by the growers are underweighting of cane at purchase centres and mill gates, undue deductions by mills up to 10 per cent, delays in payments, middleman, obtaining an indent, and the payment of premium.

Price structure- 24% in taxes hence less margins whereas imported at a higher price. Over-demanding Transporters Production, consumption and demand play an important part as production depends upon support price. Consumption relationship indicates the price elasticity for refined sugar

Increase in Demand

The sugar demand is increasing around 8% annually. A person takes 55gms on average per day. Also, industrial demand is also increasing at a rate of 5% per year. Illegal trade or smuggling done in neighboring countries due to increase demand in those countries.


The purchasing of excess stocks from mills and delayed payments to growers, and delay in crushing are bad aspects for the industry. Sugar mills, producing in excess to markets demand are portrayed as going through a difficult period and in need of the state support. Thus many are provided the governments assistance in a situation that is not the responsibility of the state. There is an upward trend in sugar price in the international market but the almost double domestic rate is simply not justifiable

Policymakers have failed to realise the gravity of the situation. Instead of checking the price hike, a free hand has been given to hoarders and profiteers, operators of the utilities stores for forcing consumers to buy other items if they sought sugar at controlled price. The government has failed in adopting a proper agriculture policy. There is no planning at any level for important crops, including sugarcane, and no monitoring system. Sugar crisis persisted despite the fact that some two million tons was produced and a huge quantity imported. The countrys requirement is four million tons a year as against the supply of six million tons produced by more than 70 sugar mills. Although, the government intervention is limited in keeping the prices at a reasonable level but maintaining self-sufficiency in sugar production, static yield and weaknesses in existing regulations are few problems facing the industry.


Backward and Forward integration can help increase production as well as genetically modified seeds. Break the cartelization. Govt. should allow FDI and Private investments. Increase the area of cultivation by providing incentives to farmers. Old methods are used due to which the yield is really low. Modern methods are required.

The shortfall of up to one million tons could be eased if the buffer stock available with the Trading Corporation of Pakistan (TCP) is utilised which is cheaper also. There is a need to appoint an investigating committee to probe the causes and suggest steps to revitalize the sugar sector. There is need for seed treatment in sugarcane cultivation Sugar mills should be bound to arrange and distribute seeds of high yielding varieties on easy terms to enhance production and to reduce poverty. Awareness among farmers on the balanced use of fertilizer be enhanced, and the government should take necessary steps to increase its supply at reasonable rates and at proper time. Demonstration plots should be organised by on village level to disseminate information among the farming community in an effective manner.