Mr. Asif H. Kazi, Former Member (Managing Director) of Water Wing of WAPDA, Ex Special Secretary Government of Pakistan
Much has been written and said on various aspects of our multifarious sugar issues including subsidies, fake exports, hoardings, price fixations, tax evasion, under-payments/ late payments to cane growers, and “benami,” sugar assets, etc. To the author of this write-up, there is a far more important and a fundamental issue that pertains to this devilish sweetie called sugar that keeps on being neglected by all rulers, commissions of experts, and regulatory authorities. I believe the omission is inadvertent and not deliberate.
Pakistan is located in the sub-tropics with insufficient rainfall, and has been characterized by international bodies as a water-stressed country on the basis of availability of water in cubic meters per capita. As against this position, the demand for irrigation water by sugarcane is by far the highest among all the crops in the world. In a water-deficient country, the cane growers are compelled to cut corners not only in terms of irrigation but also in terms of providing all essential inputs like Urea, DAP, which results in lower sucrose content that in turn renders sugar-making so expensive that it is not only non-competitive in international markets, but it also becomes unaffordable domestically.
Although most of the sugar produced globally is still based on sugarcane; yet it is so because tropical countries have abundant water with plenty of rainfall like Thailand. Parts of Brazil and European countries, though away from the tropics, are also able to produce cheap sugar, because they use sugar beet as the raw material instead of sugarcane. There is thus a glut of inexpensive sugar in the international markets, and for this reason smart countries like USA and China are the two largest importers of sugar even though they are not water-stressed countries. Brazil and Thailand, on the other hand, remain the two largest exporters of sugar. In comparing sugarcane with sugar beet, the latter is not only a short duration 4-5 month crop, it requires merely 1/3rd of water needed by sugarcane which is a full year-round water-sucking monster. Sugarcane needs 8-10 feet of aggregate water depth while for sugar beet it is merely 3 feet. Export of cane-based sugar, with or without subsidies, can never be a shrewd move since with every Kg of sugar, Pakistan delivers as much as 5,000 liters of our precious and scarce water free of cost.
Verifiable figures and simple arithmetic presented in this write-up would show that saving huge quantities of water from sugarcane, and using them on other low-irrigation but high-value crops, would be a far more profitable option for Pakistan. Sugarcane at present is grown on 1.2 million hectare (3 million acres) of good quality land falling within the canal irrigation boundary. This high-delta crop utilizes as much as 27 Million Acres Feet (MAF) of water annually out of our total water availability of 105 MAF (canal plus groundwater at outlet/ “mogha”). Almost 80% of the sugarcane is being used for sugar making while the remaining 20% is consumed by the farmers directly in their traditional way including “Gur”-making etc.
Keeping the latter quantity intact, the 80% water released by the sugarcane, would amount to 21.6 MAF with a breakdown of 13.6 MF in Kharif (summer) and 8.0 MAF in Rabi (winter) season. Since the cropping intensity i.e. area actually sown versus cultivable land available, under various canal systems in Kharif season averages some 75% while in Rabi season it is merely 40%, land is not yet a constraint in Pakistan while water is, and its scarcity will continue to get worse as the population increases.
Various substitute cropping models would be available for utilizing the water to be freed by sugarcane. Presented herein is one such option that would appear highly profitable for Pakistan. According to this alternative, the water released from cane can be utilized with huge gains by growing sunflower seed for edible oil in Kharif and pulses in the Rabi season. Pakistan imports about 2.4 million tons of edible oil which is a great burden on our foreign exchange account. Less than 20% of our needs, @ 13 Kg per capita of oil, is being produced domestically. Sunflower and soybean are the two suitable seeds for safe oil consumption. Pakistan possesses considerable experience in cultivating sunflower. In earlier years, when sunflower was introduced in Pakistan and the Government’s support was available in terms of quality seed, etc., the yield of this oil-bearing seed was as much as 3.55 tons per hectare which was the highest in the region. In 1980s, the support price of sunflower seed was Rs 1600 per 40 Kg which by the year 2015, when the cost of production had tripled all over the various sectors of economy, the sunflower was being traded at an unbelievably low price of Rs 1500/-. Inadequate inputs combined with discontinuation of Government support, ruined the sunflower crop.
Sunflower seed needed to replace the 2.4 million tons of edible oil imports would amount to 4.25 million tons @ 1.4 Kg of seed required to extract 1 liter of oil. Irrigation water needed for this much sunflower, which is a summer crop, would be 13.2 MAF as against 13.6 MAF surrendered by the reduction in sugarcane plantation in the summer season. Savings on import of edible oil would thus be $ 2.1 billion which is our annual import bill (Economic Survey of Pakistan 2018-19). Utilizing the remaining surplus of 0.4 MAF of Kharif water, an easy option would be to grow additional moong or mash pulses. Our export could thus be enhanced by $100 million ($ 0.1 billion).
In the winter season, using water given up by sugarcane, popular pulses such as chickpeas, grams and masroor can be grown to enhance our exports. Currently, pulses in Pakistan are largely sown in rainfed, marginal quality lands such as in Potohar areas. The pulses being a rich source of vegetable proteins, and also because of a sharp rise in the number of vegetarians all over the world, their demand is growing at a fast pace. UNO had celebrated 2015-16 as the Pulses Year to encourage farmers and the governments to grow more of this non-animal protein. Pulses also play a key role in combating malnutrition among the lesser fortunate segments of our society. As such, pulses deserve a regular quality land within the boundary of Indus Basin network of canals so that assured supply of water is available at critical times of flowering and pod formation.
At present, shortfall in pulses is being met by import of an average quantity of 630,000 tons each year @ $635 per ton or Rs 101 per Kg. The current yield in rain fed, poor quality lands, under acute water stress is
dismally low. However, if water vacated by sugarcane in Rabi season is utilized by pulses, the yield can easily go up to 1000 Kg or one ton per acre. Large quantities of pulses can then be grown, utilizing the 8 MAF of cane-spared water in winter. Their full irrigation demand is merely 1.5 feet from sowing to harvesting, and therefore a quantity of 5.3 million tons of pulses can be obtained with 8 MAF of water. After meeting 630,000 tons of shortfalls faced at present in local consumption, FC earnings on export of 4.7 million tons of pulses would amount to a huge sum of $3.0 billion. Adding to it the savings on import of edible oil in the sum of $ 2.1 billion, and other savings/ earnings as stated earlier, would thus yield a total FC savings/ earnings in the sum of $ 5.6 billion. As opposed to this potential, the total cost of importing our full needs of sugar of 5 million tons per year would be merely $ 1.4 billion. The net trade balance would thus be as follows:
- Savings on import of edible oil : $ 2.1 billion
- Savings on import of pulses : $ 0.4 billion
- Earnings on export of pulses : $ 3.0 billion
- Earnings on export of rice : $ 0.1 billion
- Total FC savings/earnings : $ 5.6 billion
- Less FC cost of importing 5 million tons of sugar : $ 1.4 billion
- [@ $ 295 per ton i.e. average of $ 350/ton the highest
- In last 52 weeks and $ 240/ton the lowest]
- Net Savings/Earnings of FC : $ 4.2 billion
The proposed change would need to be implemented gradually but firmly over a period of 3-5 years. As a first choice, the current sugar millers be offered the option of converting their premises to edible oil extracting units and/or pulses processing facilities. If they be in a cooperative mood and ready to invest in converting/remodeling their installations, the Government should extend to them liberal concessions as incentives. In case the millers refuse to accept, new investors may have to be involved.
A traditional stance taken by all failing businesses, which might also be adopted by the sugar millers, could be that in shutting down sugar-making factories, about 100,000 workers would be laid off at these tough times. On the contrary, according to one estimate the huge quantities of edible oil and pulses to be processed would require more than 250,000 workers.
Pakistan has to get rid of the wasteful cane-sugar relationship that is gobbling up our scarce water resources, and at the same time is burdening the consumers with a price that is at least 60% higher than the international rate. As indicated above, the import cost of our full sugar demand would be $1.4 billion compared to some $5.6 billion worth of other essential food products which remain ousted by cane’s massive uptake of water. The net loss to our current account is therefore $4.2 billion each year.
