Sugar is an indispensable trade good which, irrespective of the income degree, is consumed by all sections of society. The production and distribution of sugar have made it one of the major sectors of PakistanaˆYs economic system. It has important backward and forward linkages. Pakistan ‘s sugar sector has a large potency as in footings of sugar cane cultivation country it is the fifth largest state, in footings of production 15th largest and 60th in footings of output per Hector of sugar cane worldwide. However, it is astonishing that despite all this possible, Pakistan is unable to export sugar in the international market and even imports to run into the domestic demand. Hence, in this background, it is desirable is that grounds may be explored to happen out the causes of failure. Whether it was due to the domestic factors such as inefficiency of the sugar Millss, non acceptance of modern assortments of sugar cane and new engineering as compared with other sugar bring forthing states, or the protectionist steps abroad like duties, quotas, export subsidies etc. have blocked the Pakistan to come in into the international sugar market.
Since independency in 1947, Pakistani sugar sector have seen many turns and bends which is continued to its present. Different factors have played functions in finding the waies for the sugar sector. Sometimes the economic or political factors and adhocism in policy intercessions have diverted the development of the sector. The magnitude and impact of these factors have reinforced each other and had been successful in interrupting the impulse of ego sustained growing. The proprietors of the sugar Millss, chiefly the political elites, have besides shown less involvement towards taking inefficiency that exists in the sector.
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Now on the analysis side, it can be hypothesized that the ground of bing province of personal businesss is that overtime the sugar industry has been unable to follow proactive attack and has been failed to set up a dynamic, competitory construction with an purpose to better productive and commercial efficiency. This is the chief ground that since Pakistan ; s sugar sector has failed to react to the challenges and could non harvest the chances arising in the regional every bit good as international markets. Bearing the fact in head that despite holding the big potency to be a dynamic exporter ; sugarcane grower with favourable agro-climatic conditions and manufacturer has really had to import sugar to run into its domestic demand. This paper has been written as an effort to happen out that Pakistan ‘s sugar sector is confronting what jobs from competition and efficiency position ; whether at domestic forepart or at international degree in the form of protectionist steps and to analyse the function of policy intercession and so to propose some accomplishable solutions.
Pakistan has fundamentally as an agricultural based economic system with major harvests of cotton, wheat, rice and sugar cane which becomes a natural stuff for industrial sector. Sugarcane is 2nd most of import hard currency harvest in the state after cotton. In footings of sugar cane cultivation country, Pakistan is the fifth largest, 15th in footings of sugar production and at the tail 60th figure for sugarcane output per Hector worldwide. Pakistan has a large installed capacity of sugar production and at present 83 sugar Millss are runing nationally. It is interesting that despite have the immense potency to bring forth sugar, Pakistan is a large importer of sugar on which has eaten away difficult gaining foreign exchange.
This state of affairs makes Pakistan ‘s sugar sector an interesting instance to research the factors responsible for the state of affairs. Two dimensions approach is required to be adopted to happen out the grounds impeding Pakistan to be an exporter. First is that protectionist steps adopted at international degree by the others states have important impact on Pakistan ‘s sugar sector. Second, at domestic forepart, the sugar industry is inefficient due to multiple factors such as low productiveness, unscientific cultivation, deficiency of modern engineering acceptance and absence of research & A ; development etc. In this context, deficiency of serious attempts by the stakeholders has farther aggravated the job.
This research paper has made an attempt to capture the impact of all the factors and found that although Pakistan should hold a sound scheme to manage protectionist attack adopted by international participants ; nevertheless, at this point of clip, it is more of import to cover with inefficiencies prevalent in the sugar sector ; which has made the opportunities of Pakistan, to be an exporter, really distant. The policy shapers should believe about policy displacement to run sugar production machinery at full capacity, modern assortments, new technological acceptance and research and development. In the terminal this research paper has besides discussed different policy steps to hike the possible to get the better of this crisis.
Table of Contentss
1.1 Statement of Problem
1.2 Significance and Scope of the Study
1.3 Review of Literature
1.5 Organization of Paper
2.1 The Sugar Market in Pakistan
2.2 International Sugar Trade Outlook
3. Protectionist Measures
3.1 The Theory of Protectionism
3.2 Protectionist Measures in the Recent History
3.3 Dispute declaration through Trade Agreements:
4. Quantitative & A ; Qualitative Analysis of Pakistan ‘s Sugar Sector
4.1 Sugarcane Production Yield
4.2Low Sucrose Recovery
4.3 Sugar Mills Capacity
5. Conclusion & A ; Recommendations
6. Notes and Bibliography
Pakistan is fundamentally an agricultural state. Agriculture has played a critical function in the industrial development of the state being supplier of input stuff ; hence is the anchor of economic system. The major harvests include cotton, wheat, rice and sugar cane. Pakistan has showed a good advancement in production of wheat and rice through usage of modern assortments, new agribusiness techniques and usage of fertiliser during “ Green Revolution ” in early sixtiess. However, in instance of sugar cane, the country under cultivation has increased overtime but yield had remained on lower side in comparing to the regional states every bit good as worldwide. Even so, Pakistan is included in the chief manufacturer of sugar. After fabric, the Sugar industry is the 2nd largest agro-based industry in the state which provides natural stuff for many other industries ( Atta et al. , 1991 )[ 1 ]. In footings of sugar cane cultivation country, Pakistan is the fifth largest, 15th in footings of sugar production and at the tail 60th figure for sugarcane output per Hector worldwide. Pakistan has a large installed capacity of sugar production and at present 88 sugar Millss are runing nationwide which makes it 4.2 per centum of fabricating sector with an employment of more than 1.5 million people. The Sugar Mills have oppressing capacity of 505,000 tonnes/day with an one-year capacity over 6.1 million tones. During the twelvemonth 2010-11 sugar Millss operated at merely 53.21 % of their installed capacity. However, in the last 5 old ages the mean capacity use remained around below 70 % . Its portion in value added of agribusiness and GDP are 3.4 per centum and 0.7 per centum, severally with a entire investing of more than Rs. 100 billion[ 2 ]. Pakistan is ranked 5th in universe sugar cane land area with an country of 987,700 under cultivation ; 15th in sugar production with an one-year sugar production of 4.1 million tones for the twelvemonth 2010-11[ 3 ].
Historically after independency in 1947, Pakistan had a really low capacity of sugar production with merely two sugar Millss the production of which was insufficient for the domestic demand. Attempts continued to increase the installed capacity and presently the entire figure of sugar Millss has reached to 88 in the twelvemonth 2010-11 ( PSMA )[ 4 ].
With a immense country of more than 1 million hectare under cultivation for sugar cane and a large installed capacity of sugar production, it remains a mystifier that alternatively of sugar excess state, Pakistan has to run into the spread between supply and demand through imports doing it a net importer. Comparing three chief factors of sugar Millss use of installed capacity, output per hectare of sugar cane and sugar recovery rate clearly indicate the job. Pakistan ‘s sugar Millss have an installed capacity of over 6.1 metric tons per twelvemonth nevertheless, in the twelvemonth 2010-11, it operated merely at merely above 50 % . On the other manus, although in footings of country under cultivation for sugar cane, Pakistan is among the top five states, nevertheless, has lowest output per hectare in the universe. As per universe statistics Pakistan is included in the low output ( lower than 6t/ha ) class where no other top sugar bring forthing state exists. Pakistan on norm is bring forthing 47 tonnes/hectare, which is about on the lowest side. Its adjacent state India who has the indistinguishable environment, dirt and features, has a output of 71 metric tons per hectare. Other sugar bring forthing states have an mean output of sugar cane: China 77.1, Philippines 92.6, Thailand 92.6, Australia 75.5, Egypt 105 Colombia 117 dozenss per hectare[ 5 ]. The sugar recovery is besides on the lowest side i.e 8.5 % against obtained recovery of 10.5 %[ 6 ].
STATEMENT OF PROBLEM
Pakistan has a large potency to export sugar and supply in the international market.
However, as an internal factor, Pakistani Sugar Industry is inefficient and has really low productiveness due to which it has non been able to bring forth more for export. In the international context, the agribusiness manufacturers of sugar exporting states have been able to capture the international market by offering low monetary value due to heavy subsidies by their several authoritiess. On the other manus the importation states have besides imposed some duty & A ; non tariff barriers e.g. quality trial & A ; quota etc. on import of sugar which further limits the opportunity.
Due to these internal & A ; external factors, the Pakistani sugar exporters have non been able to capture the international market despite the fact that Pakistan has comparative advantage to bring forth at low cost.
At this point both the factors have important impact on Pakistan ‘s sugar sector. Therefore, it should be analyzed that which factor should acquire precedence on other.
SIGNIFICANCE AND SCOPE OF STUDY
The literature available related to the sugar sector has chiefly been focused on productiveness, inefficiency, political influence and policy intercession by the authorities. However, there is no survey available as per best of my cognition which have analyzed the relationship of domestic inefficiencies with the potency of export and harvesting the benefits of chances available in the international market. The old research have been unable to place the complete way get downing from bettering productiveness at place to export at international degree. The connectivity between domestic inefficiencies with protectionism abroad is of extreme importance. The ground buttocks is that Pakistan has a immense potency to bring forth sugar with sufficient country under cultivation and installed capacity of sugar production. Therefore, this capacity must be utilized at optimal degree. For that, in 2nd phase, domestic inefficiencies and low productiveness issues need to be addressed. In the 3rd phase, when the sugar industry is efficient plenty, there is need to believe about international market for export of excess sugar. Pakistan is unluckily at the first phase where domestic market is inefficient. Therefore the research workers have been more focussed merely on domestic inefficiencies. As a proactive attack, this research paper will try to turn to the issues related to the 2nd and 3rd phase i.e. domestic inefficiencies and protectionate steps abroad and their impact on Pakistan ‘s sugar sector.
REVIEW OF THE LITERATURE
Throughout the history of history of modern economic growing, a major confrontation has persisted on the pick of development scheme between accent on the efficiency of the free market and the control on market activities through authorities planning and bid. This confrontation has frequently revolved around two opposing positions on international trade- the statement for free trade along Adam Smith ‘s tradition, and the statement for trade protection normally called as baby industry protection. Protectionist policies were normally adopted from 1950s to 1970s in the development states to procure the domestic markets for domestic makers by stamp downing foreign competition with duties and other signifiers of boundary line protection on domestic manufacturers, allotment of subsidies and direct credits to aim industries import quotas, favourable revenue enhancement intervention and foreign exchange licences. Such protection policies were considered indispensible for set uping feasible industries in developing economic systems handicapped with low capital accretion, less skilled laborers, and developing entrepreneurial and managerial capacities ( Hayami et.al, 2004 )[ 7 ]. Consequently logic was that it is necessary and desirable for authorities to protect industry which has no opportunity of being established under free market competition at present, but are expected to be major subscribers to national development if they are protected until they grow to vie in the free market.
List ( 1827 )[ 8 ]argues that the authorities should protect domestic industries against competition from abroad until these industries become feasible under free trade.Development of feasible industries will be farther facilitated if the increased budget from duties gross is used for the supply of such public goods like proficient instruction.
In contrast Adam Smith and Ricardo[ 9 ]advocate remotion of trade limitations as a major agencies of maximising the wealth or income of the states. Harmonizing to him, remotion of trade limitations would convey efficiency[ 10 ].
Trade protectionism is a defensive measure which is normally politically motivated to salvage the local industry from the harm of unjust competition. However, it has far making effects on international trade and for both importation and exporting states. The domestic industry will probably to remain inefficient and the consumer will non be able to profit from the fruits of free trade. Based on following hypothesis is derived:
H1 Due to protectionist Approach, Pakistan ‘s Sugar Industry has stayed inefficient.
Pakistan ‘s Sugar sector has a large potency to bring forth excess sugar, nevertheless, due to miss of involvement of the stakeholders including authorities, factory proprietors and agriculturists it has been reduced to a crises ridden industry ( Shamim, 2002 )[ 11 ].
On the efficiency issue, Jamil ( 2000 )[ 12 ]argues that Pakistan has an installed capacity of sugar production which if operated at full capacity can bring forth sugar which non merely will run into the domestic demand but excess sugar will besides be available for export. He farther argues that low output old traditional Indian assortments of sugar cane have created a job of low productiveness although Pakistan is among the top states in footings of sugar cane country under cultivation. The cultivation of low output assortments has annulled the consequence of big country cultivation. Alam et.al. ( 2001 )[ 13 ]and ( Khalid et.al, 2007 ) besides found that Pakistan has really low output per hectare as compared to other states which is on mean 40-45 metric tons per hectare. Recovery rate of sugar is about 9 % in Pakistan as compared to 12-14 % of other sugar bring forthing states which is besides on really lower side. A hypothesis has been made that:
H2: If the domestic inefficiencies are controlled, Pakistan can go a net exporter of sugar with bing installed capacity.
Economicss literature on trade understandings has been discussed in item by Arvind Panagariya ( 2000 )[ 14 ], Garry Pursell et.al ( 2001 )[ 15 ]etc. on the issues of economic public assistance, regional trade enterprises and trade understandings[ 16 ].
Scitovsky ( 1942 )[ 17 ]argues that through scene of trade barriers, authoritiess maximizes their state ‘s public assistance. However, the states which set trade barriers one-sidedly are worse off while trade understandings with mutual bindings makes them better off. Kouparitsas ( 2000 )[ 18 ]found the similar consequences in North America in a instance survey that irrespective of the size of a state, concerted and regional trade understandings make spouses better off.
The trade understandings help in smooth trade supplying a just method of difference declaration to the members without any struggle. The trade understandings put duties on the members to avoid raising unneeded trade barriers which prevents escalation of trade limitations. During great depression of 1929, when trade slowed down, some states took protectionist steps which resulted into decrease in planetary trade by 25 % ( WTO? ? ? ) A hypothesis is made that:
H3: Pakistan can neutralize the impact of protectionist steps adopted by other states through the forum of different trade understandings.
This survey is based chiefly on primary every bit good as secondary beginnings. The primary informations related to the sugar sector has been obtained from Pakistan Sugar Mills Association ( PSMA ) through their web site, studies and interviews. The information has besides been obtained from Pakistan Bureau of Statistics ( PBS ) , once Federal Bureau of Statistics ( FBS ) , Ministry of Industries, Ministry of Commerce and Ministry of National Food Security from their different studies and studies. Reports of the Federal/provincial authorities ( s ) like economic study, sugar studies etc. has been reviewed. Interviews were besides conducted with different persons who have been associated with issues sugar sector of Pakistan at the policy and execution degree, to acquire different positions. The available information was analyzed. The available literature has besides been reviewed including academic literature, relevant statics, assorted studies of the authorities and giver bureaus on the topic and different studies conducted. The study has been prepared in descriptive signifier, and relies mostly on qualitative analysis.
Organization of the Paper
This paper is divided into the introductory portion, three chief subdivisions, followed by the recommendations. Section-1 comprises analysis of Pakistan ‘s Sugar market and of the international Market. In this subdivision the issues related to provide and demand of sugar at domestic every bit good as international degree has been discussed at length. The production capacity, existent production, domestic ingestion and imports/exports has been explained. Then the domestic production and demand has been connected with the international demand. Section-2 relates to the theory of protectionism in historical position every bit good as in the current scenario. The impact of protectionist steps on sugar exporting states and a forum for redresss has been elaborated. In the Section-3has been spared to happen to happen out the grounds that why Pakistan could non hold exported sugar. The practical attacks and schemes for productiveness sweetening introduced and experimented in assorted states and the empirical findings shall be analyzed. The paper concludes with a comprehensive set of recommendations covering issues both at the policy and execution degrees.
Section 2 – Market
2.1 The Sugar Market in Pakistan
Pakistan inhibits 2.56 % of the entire universe population doing it the 6th largest state with a population of over 180 1000000s. In add-on to this over 6 million Afghan refugees and 2 million other nationalities are at the nutrient burden of Pakistan[ 19 ]. Historically Pakistanis are a sweet tooth state where sugar is consumed in each house every twenty-four hours. At domestic degree different dishes are prepared in the places in all sections of the society, of which sugar is an of import constituent. At the industrial degree, the sugar is used in all sorts of drinks including tea, soft drinks, cold drinks and traditional drinks like lassi, qehwa etc. Sugar is besides an of import ingredient of bakeshop points, Sweets & A ; confectionary and pharmaceuticals. At present per capita ingestion of sweetening in Pakistan is 24.08 harmonizing to PSMA figures which is highest in the development states. Over the clip it has about followed the same form and no unnatural fluctuation has been noted.
Beginning: Pakistan Sugar Mills Association, PBS
However, due to rapid addition in population, the demand of sugar is likely to increase to certain extent in the old ages in front. It is estimated that the sugar demand form will about follow the population growing rate which is 2.3 % per annum. It is estimated with this growing rate that Pakistan will necessitate 5.5 million tones to run into the domestic demand ( Khalid et.al, 2007 ) .[ 20 ]
In footings of sugar cane production, Pakistan stands 5th, and 15th in footings of sugar production. The sugar production in Pakistan has followed a fluctuating tendency. In some old ages at that place was extra sugar which non merely met the national demand but was besides exported though in limited measure. Sometimes due to low domestic production, the spread was met through heavy imports. For case during the twelvemonth 2005-06, domestic production was about 2.5 metric tons against the national demand of about 4 million tones. To make full this spread, the authorities has to import sugar from the international market. This deficit of sugar resulted into rise of monetary value ( Rs. 35-40 per kilogram ) . However, in the coming old ages, the sugar production has jumped over 4.1 1000000s ( 2010-11 ) which is due to increase in output due to increase in sugarcane country under cultivation triggered by the monetary value hiking in the market.
Beginning: calculated on the footing of informations of PSMA, FBS
The place of sugar for the season 2011-12 is 4.634 million metric tons sugar has been produced and a stock of.259 1000000s tones is available doing entire production to 4.893 1000000s tones. Monthly demand of sugar has been calculated @ 3,50,000 tonnes/month ( M/o Industries )[ 21 ]
The sugarcane country under cultivation has besides well increased since independency. Currently sugarcane cultivation is busying five per centum of the sum cropped country and sugar cane histories for 17 % of gross value added by all harvests ( khalid et.al, 2007 ) . Since last two decennaries, the country under cultivation for sugar cane has shown small fluctuation as it ranged from.883to.987 million hectare. The lifting tendency in addition of sugar cane under cultivation country has been observed in few old ages which was chiefly due to higher cane monetary values in the preceding twelvemonth. However, the output per hectare unluckily remained dead and stood at really lowest rate. Due to this low productiveness, the sugar production has besides suffered and Pakistan ‘s sugar sector has been unable to come out from this barbarous circle of low productiveness.
Harmonizing to authorities beginnings every bit good as of the sugar Millss association, the installed production capacity to bring forth sugar is more than 6 million metric tons a twelvemonth. At present, there are 88 sugar Millss runing across the state. It has been observed that the sugar Millss did non run at their full capacity resultantly ; the sugar production has fallen short of demand in the domestic market. The Sugar Millss operated at a capacity of 60-70 % . There are multiple grounds for this stagnancy which includes deficiency of handiness of natural stuff, political motivations and operation at low capacity to make unreal deficit to increase the monetary value.
Sugar Sector in Pakistan is under the control of the authorities and is a contolled market. Government of Pakistan imports sugar through Trading Corporation of Pakistan to run into the spread. Export is besides governed through Ministry of Commerce. In twelvemonth 2009, the authorities of Pakistan banned the export of sugar due to shortfall in the production of sugar which led the monetary value to increase over Rs. 100. However, after a prohibition of three old ages, late in twelvemonth 2012, the Economic Coordination Committee ( ECC ) had allowed the Sugar Mills proprietors to export 1000,000 metric tons of sugar due to bumper harvest of sugar cane.
This proves hypothesis 1 that in a controlled market, Pakistan ‘s sugar sector has stayed inefficient.
The information shows that monetary value remained stable since 1947 to 1978 chiefly because of stable supply and demand state of affairs. However, a steep rise in monetary value was observed from 1980 onwards.
GRAPH? ? ? ? ? ? ? ? ? ? ?
2.2 International Sugar Trade Outlook
Internationally the production of sugar showed a diminution in the twelvemonth 2010 which was chiefly due to bad conditions which retarded sugar production in two major manufacturers India and Brazil. This diminution in production straight affected the universe sugar market and sugar monetary values in the international sour up about about to duplicate.[ 22 ]
World Sugar Balances, 2011-12
172.370 million dozenss.
168.157 million dozenss.
+4.213 million dozenss.
Entire universe import demand
48.447 million dozenss.
Entire universe Export handiness
52.160 million dozenss.
57.514 million dozenss.
Beginning: ISO universe Sugar balance August 2011
The one-year sugar production is lifting about 2 % yearly. In the last decennary, it has increased from 142.2 million metric tons in 2003-04 to 172.37 metric tons in 2011-12. Brazil remained top sugar manufacturer with 39.45 million tones followed by India 21.15 ; EU 27 16.76 and China 11.6 million tones. It is estimated that about 70 per centum of sugar produced is consumed where it is produced. Merely 30 % sugar is traded. Australia exports 76 % of its sugar produced ; Brazil 59 % ; Thailand 52 % and India and Mexico merely over 5 %[ 23 ]. It has been projected that universe sugar trade will lift by 19.9 % between 2010-20. The trade volume is expected to increase from 34.5 million tones to 37.9 million tones in the same period. The production of sugar by chief participants will besides increase for case, the production of Brazil will increase by 9.3 % ; Canada 8.6 % and Mexico 10.6 % during the same period. The sugar exporting states will increase their production to run into the international market ‘s demands. Whereas importing states including China, Indonesia, Egypt and Algeria will besides increase their imports. The sugar import of Asiatic and African states will increase by 6.7 per centum and 16.8 per centum severally. China is expected to increase its sugar imports by 88.6 per centum boulder clay 2020[ 24 ]
On the ingestion side India remained the highest with 22.83 million tones, EU-27 19.15 ; China 14.85 ; Brazil 13.23 and USA 10.15 million metric tons yearly. Whereas the highest per capita sugar ingestion is in Cuba, 61 kilogram ; Australia 60 ; Brazil 56 ; Mexico 50 kilogram per capita and lowest in China 7 kilogram ; India 17 kilogram with universe ‘s 21 kg mean per capita ingestion.
3.1 Theory of Protectionism
“ Government actions and policies that restrict or restrain international trade, frequently done with the purpose of protecting local concerns and occupations from foreign competition. Typical methods of protectionism are import duties, quotas, subsidies or revenue enhancement cuts to local concerns and direct province intercession ”[ 25 ]
The theory of protectionism is an anti free trade theory. Almost all the states in the universe have adopted a sort of protectionist steps to back up their local industry and occupations. Due to free trade, the consumers are better off to buy goods at cheaper rate, nevertheless, in long run the local industry and employment may endure. Protectionists translate free trade into exporting of local occupations to other states. As each protectionist policy has some protectionist aims and ends therefore, it differs for importing states to exporting states.
For the states at importing terminal, Tariffs is normally used option which is sort of revenue enhancement imposed on imported goods. Duty rates are different depending upon the type of goods imported. The chief aim behind baronial duties is to increase the monetary value of imported goods to prefer the local manufacturer as due to increase in monetary value fewer goods will be imported. Import Quota have the aim to cut down the measure imported which will finally ensue in increasing the market monetary value of imported goods. In footings of economic consequence, quota and duties have similar effects with one exclusion that in instance of enforcing quota limitation, the authorities of the importing state loses the gross to be generated from duties. Those who get the import quotas are benefitted ; hence, the authorities can counterbalance his loss from sale of import licences. Some states introduce Administrative Barriers like environmental criterions, nutrient safety and electrical safety to curtail imports to their markets. These barriers have proved to be more effectual as compared to duties and quotas. Anti dumping statute law prevent the importing states from dumping of inexpensive foreign goods which would oblige the local manufacturer to go out the market. Direct Subsidies are given by the authorities to the local manufacturers to vie with the inexpensive imports. These subsidies may be in the form of revenue enhancement decrease, loans and even chunk amount payments etc. The aim of direct subsidies is to protect the local baby industry and restrict occupations to be exported to other states.
From the point of position of exporting states Export Subsidies are a best tool used by the authoritiess to hike their export sector. Governments pay a per centum of value of exported goods to the exporter. It has precisely the same consequence as in instance of import subsidy if the state has a floating exchange rate. Exchange Rate Manipulation is another tool in which a state lowers its currency value which will increase the monetary value of imported goods and lower the cost of exporting goods. It will convey betterment in balance of trade. This policy may convey good consequences in short term, nevertheless, in long tally it will ensue in high rising prices ; which will increase the cost of exporters and cut down the cost of importers. Patent System is besides being used as a protectionist arm to protect the auctorial labour. Some states use it as cloak at national degree to mask the protectionate trade policies.
3.2 Protectionist Measures in the Recent History
The history of protectionism has its roots in the late history, nevertheless, presently different states are utilizing the protectionate step more efficaciously. European Union ( EU ) ‘s protectionist policies have imposed limitations on certain providers by giving them limited free entree to their markets. They have besides adopted a system of internal support monetary value for fixed measures of production. Alongwith this they are besides offering export subsidies on sugar produced domestically. Due to EU ‘s committedness in Uruguay Round, EU have stopped subsidized export of sugar to 3rd universe states. Due to limited production of sugar, EU has become a net importer. In twelvemonth 2009, for non discriminatory states, has taken positive stairss in the form of decrease in duties and decreased export subsidies.
South Africa which is 14th largest sugar cane manufacturer has adopted protectionist steps of internal monetary value supports and export subsidies. Although under universe force per unit area South Africa has reduced the measure of its subsidised export, but the volume of export is really high. In South America, Mexico, 11th largest cane sugar manufacturer, is besides back uping its sugar sector through subsidised exports and subsidy on natural sugar storage.
Some states sugar sector is being handled through their province corporations. For case in 1991, Australia has established a statutory authorization Queensland Sugar Corporation ( QSC ) to manage its exports. The QSC has a authorization to export 100 % natural sugar produced in Queensland, which is 95 % of the sugar produced in Australia. QSC have taken different stairss to back up the local manufacturer such as selling quotas, purchaser marketer agreements to insulate local manufacturer from foreign competition. Under the Uruguay Round, the State trading endeavors ( STEs ) were non addressed Like Australia the sugar trade is being handled by STEs in other states which includes China and India.
The sugar farming industry of United States is one of the most protected industries in that state. A series of Import tariff-rate quota ( TRQs ) are in topographic point as a protectionist step. These TRQs are really complex which chiefly are related to restriction on import of goods, quotas, duties and heavy revenue enhancements on these imported goods. In some instance, the duties rise to about 150 % of the sugar ‘s price/cost.
3.3.3 Dispute declaration through Trade Agreements:
The trade understandings help in smooth trade supplying a just method of difference declaration to the members without any struggle. The trade understandings put duties on the members to avoid raising unneeded trade barriers which prevents escalation of trade limitations. The outstanding illustrations of trade understandings are CFTA between Canada and United States, NAFTA, SAFTA in South Asia and ASEAN etc.
In 2006, good celebrated trade protectionist steps related to saccharify sector by EU were objected by Brazil, Australia, Thailand etc. at the forum of WTO. Consequently, EU has to cut down its subsidised production of sugar and export to developing states. Now the EU has become net importer from net exporter. When Pakistan has manufacturer excess sugar, it will hold to look for the international market. At that clip, Pakistan can decide its trade issues through different trade understandings such as WTO, SAFTA etc. This proves hypothesis 3.
Section 4 – Quantitative & A ; Qualitative Analysis of Pakistan ‘s Sugar Sector
Pakistan ‘ sugar industry is confronting many job, nevertheless, this paper has restricted it to three chief countries i.e. Yield per hectare, sugar recovery rate and sugar Millss capacity In this subdivision an analysis of jutting figure of three chief countries is discussed on the footing that if all these factors are raised to the universe norm in a inactive theoretical account, whether Pakistan can be a sugar excess state.
4.1 Low Sugarcane Production Yield
One of the chief grounds of sugar sector ‘s low productiveness is cultivation of old traditional assortments which are low in sugar content and late maturing. Some of the assortments includes Co 1148, CoJ 84, SPF 238, DISCO, SPF 234 etc.. In footings of categorization of sugar cane manufacturers by output per hectare through international Survey of Sugar Crop by ISO, Pakistan is among the lowest productiveness states ( Table-III ) . The assortments under cultivation are bring forthing really low output. Following graph of the states bring forthing over 2 million tones sugar reflects low productiveness of Pakistani agriculturists.
Beginning: ISO report international Survey of Sugar Crop output
The mean output per hectare of these states has been calculated which comes to around 70 metric tons per hectare. As per statistics of PSMA, sugar cane production in 2010-11 remained 55.4 million metric tons with an country under cultivation of 987,700. Now if, yield per hectare is raised to the universe norm, the entire production comes to about 68.9 million tones ( about 25 % addition ) with the same set of land keeping other factors changeless. By this Pakistan can bring forth 1.35 million tones more sugar cane, nevertheless, one can reason that dirt construction and conditions may be different in other states. This statement may non keep valid as India is bring forthing more than 71 metric tons per hectare who have indistinguishable dirt, conditions and socio-economic status as in Pakistan. But for this modern assortments are required to be imported and diffused like wheat & A ; Rice during “ Green Revolution ” . Systematic and scientific agribusiness patterns must be adopted for cultivation and conventional methods must be discouraged.
4.2 Low Sucrose Recovery
Habib et al. , ( 1992 )[ 26 ]and Ramdoyal, ( 1999 )[ 27 ]found that a good appraisal of quality of sugar cane and the sugar content is the sugar recovery. There is no uncertainty that sucrose recovery from the sugar cane is a chief factor in increasing sugar production. Unfortunately, Pakistan has a really low recovery rate in comparing with other states. During the ( MY 2010-11 ) , 44.5 million metric tons ( 80.47 % of entire production ) sugar cane was crushed which produced 4.1 million metric tons of sugar at the recovery rate of 9.25[ 28 ]against the universe mean recovery rate of 12-14 metric tons. Adopting a careful attack by conveying the universe mean recovery rate to 13 ( norm of 12-14 ) tones, Pakistan ‘s sugar industry can bring forth 5.786 million metric tons sugar with an addition of 1.686 million tones with same measure of sugar cane. However, on the premise that sugar Millss are working on its full capacity, if the measure is increased to 55.11 ( 80 % of 68.9 ) million metric tons as calculated in the old bomber subdivision, the sugar production will increase to 7.16 million tones yearly which is about an addition of 73 % as compared to the current production of 4.1 million metric tons. However, modern assortments with high sugar outputs, adaptable to local ecological conditions and which meets its sugar industry ‘s demand must be cultivated.
4.3 Issue of Sugar Mills. Capacity
Now the issue arises that if the sugar Millss in Pakistan are able to manage the burden, if the production of sugar cane is raised to the universe norm degree. Surely, the sugar industry has the oppressing capacity to manage the burden. Currently, 88 sugar Millss are runing in the state which have oppressing capacity of 505,000 tonnes/day with an one-year capacity over 6.1 million tones based on 160 yearss season. However, the full installed capacity has non been utilized, for case during the twelvemonth 2010-11 sugar Millss operated at merely 53.21 % and in the last 5 old ages the mean capacity use remained around below 70 % .[ 29 ]This clearly shows that the bing installed capacity sufficient plenty to bring forth the sugar to run into the domestic demand every bit good as excess for export.
The estimated production degree of 7.16 million metric tons yearly by commanding merely three factors will enable Pakistan to hold 3 million metric tons surplus sugar after run intoing the domestic demand of 4.2 million tones ( @ 350,000 tonnes/month ) . This proves hypothesis 2.
Pakistan ‘s sugar sector has a large potency as in footings of sugar cane cultivation country it is the fifth largest state, in footings of production 15th largest and 60th in footings of output per Hector of sugar cane worldwide. Pakistan has a large installed capacity of sugar production and at present 83 sugar Millss are runing nationally. The Sugar Mills have oppressing capacity of 505,000 tonnes/day with an one-year capacity over 6.1 million tones. During the twelvemonth 2010-11 sugar Millss operated at merely 53.21 % of their installed capacity However, it is a mystifier that despite all this possible, Pakistan is unable to export sugar in the international market and even imports to run into the domestic demand. Further At present per capita ingestion of sweetening in Pakistan is 24.08, nevertheless, due to rapid addition in population, the demand of sugar is likely to increase to certain extent in the old ages in front. It is estimated that the sugar demand form will about follow the population growing rate which is 2.3 % per annum.
This paper adopted two dimension attack to look into that whether it was due to the domestic factors such as inefficiency of the sugar Millss, non acceptance of modern assortments of sugar cane and new engineering as compared with other sugar bring forthing states, or the protectionist steps abroad like duties, quotas, export subsidies etc. have blocked the Pakistan to come in into the international sugar market.
Three hypothesis were tested that authorities controlled sugar market have made Pakistan ‘s sugar sector inefficient. It was besides tested that by conveying systematic efficiency in merely three country of output per hectare, increasing sucrose content by presenting modern assortments and running sugar Millss at full capacity will increase to the production to 7.16 million tones yearly which is about an addition of 73 % as compared to the current production of 4.1 million tones ( 2010-11 ) .
Third hypothesis sing protectionist steps was tested and it was found that Pakistan has adopted an effectual scheme and is member of different trade forums such as WTO. Pakistan can research these channels to decide the trade related issues.
This research paper has made an attempt to capture the impact of all the factors and found that although Pakistan should hold a sound scheme to manage protectionist attack adopted by international participants ; nevertheless, at this point of clip, it is more of import to cover with inefficiencies prevalent in the sugar sector ; which has made the opportunities of Pakistan, to be an exporter, really distant. The policy shapers should believe about policy displacement to run sugar production machinery at full capacity, modern assortments, new technological acceptance and research and development.
In order to enable Pakistan to non be self- sufficient but besides to be export excess following recommendations aremade:
Traditional old Indian assortment of seed which has low output per hectare and besides have wholly degenerated and diseased affect should be avoided
The authorities, for high output should import high giving assortments of sugar cane. Government has done successfully in instance of wheat, rice and corn. For this international Research institutes should be contacted.
Assortments should be introduced on the footing agro-ecological zones of the state which besides in conformance to the milling demand.
The country under cultivation should be maintained to the present degree to be self-sufficing in sugar.
The sugar cane produced should be at least 80 % utilized by the sugar Millss.
The monetary value of sugar cane should be linked with the sucrose content and sucrose proving installations should be provided at farm.
Domestically, the authorities should resuscitate its research institute like PARC National Sugar Crops Research Institute, for research on high output assortment.
Sugar Mills should apportion budget for seed generation on regular footing.
All development Financial Institutions ( DFIs ) , Bankss, and other fiscal establishments should do a house policy to back up the sugar sector.
Government should guarantee inducements for sugar cane agriculturists to turn cane and
that they are paid adequately and quickly by factory proprietors
Production of sugar may besides be considered from sugar Beta vulgaris.
Pakistan should follow the policy to be members of trade organisation as it reduces duties and quotas between trading states.
Bilateral and many-sided and regional understandings on sugar export may be explored. In the close hereafter the demand for sugar from China is expected to lift by more than 88 % by 2020. Pakistan should research such chances.
Prevent smuggling of white sugar