Sugar industry analysis
Corrupt leader or politicians, they place their personal causes or benefits in their professional life and it causes a lot to the business sectors. Pakistan has total 84 sugar mills and most of them owned by investors and politicians. Level of hypocrisy is that before Ramadan, they have started stocking sugar and its price from RSI. 38 per jumped to RSI. 54. Several authorities claim that it is due to the fact that the governmental policies and acts are self contradictory which causes the frequent shortage in supply and increased prices.
It is a known fact that several political figures own the majority sugar mills and therefore they control how it is passed on to the middle men. This is one of the reasons which the sugar industry of the country is facing right at the moment. The mill owners and large suppliers often hold large quantities and create an artificial shortfall. Then they set high prices for its release. The sugar industry which was already facing problems due to the increase in sugarcane prices was burdened further when the government announced to increase the sales tax from 3. 50 per cent to 4 per cent.
As a consequence of the increase in sugarcane price as well as the sales tax, the overall production cost has been increased a lot, while on the other hand, the import of sugar from India at relatively low price is posing a serious threat to the survival of the local sugar industry. To avoid recurrence of such crisis, the government of Kinds had assured to take appropriate measures against the middlemen in the sugarcane industry, ensuring a direct supply of sugarcane to the sugar mills from the growers. War on Terror Next, War on Terror is the second most reason due to which there is no or little reign investment in the country.
Foreign investors are not willing or ready to invest in Pakistan Just for the security, order and law situations. This has also declined the productivity and expansion of the sugar industry within the country. Energy and Gas Crisis: When there comes the word Crises, in Pakistan means Energy and Gas crises. These have remained as the major crises in the country due to which all the business sectors (manufacturing or trading) have been affected for many years. Due to shortage of these two resources, actually not the shortage, it’s due to not full he economy of the country declines since last three to four years.
Whereas, Pakistan; is considered as having everything within it but we are not utilizing our resources hundred percent. Each and every industry of Pakistan is in alarming situation because of these issues. To avoid recurrence of such crisis, the government of Kinds had assured to take appropriate measures against the middlemen in the sugarcane industry, ensuring a direct supply of sugarcane to the sugar mills from the growers. Economic Situation: Fluctuation and Inflation The current economy of the country is extremely fluctuating and inflation increasing ay by day.
There has been an increase in the prices of the sugarcane and other materials due to which the cost of production has been increased and the profit margins have been decreased. Next, the main competitors of Pakistan are China and India; they are offering their stuff at lower prices so that’s why investors are shifting from Pakistan towards China and India. Depreciation of Pakistani Currency The value of Pakistani Currency is decreasing day by day. It is one of the main reasons of the economic instability and high inflation rate.
China has taken the major hare or part from the pie as compared to Pakistan due to strong economy and stable political systems. Pakistani currency is at the verge of collapse. According to the recent reports 20 Mans decided to leave the Pakistan and this situation would spread unemployment. HTTPS://www. Faceable. Com/photo. PH? Ibid=589688281090204&set=a. &theater Natural Disasters: 5 to 10 percent crop was affected so far due to the heavy floods and final figures would come after the end of floods. The meeting also decided that private sector would import the sugar at zero rated duty from the next season, instead of Trading
Corporation of Pakistan (TCP). Moreover it was not possible for the new sugar to enter the market before December 1, 2010 and supplement old stocks and as such 1. 2 million tons of sugar import will be continued as planned. Source: http:// www. Agribusiness. Com. PC/sugar-industry-in-Pakistan/ The sugar crop was expected to produce about 3. 8 million tons of white sugar before the floods struck. After The food ministry estimated the output at about 3 million tons against an annual demand of 4. 2 million tons. The government of Pakistan is considering a tax holiday for companies that process sugar beets.
The government this week waived a 25 percent regulatory duty and allowed millers and traders to import as much raw sugar as they want. The state-run Trading Corporation of Pakistan (TCP) will have no role in raw sugar imports. Millers estimated output at 3. 6 million tones and said the country does not need more than 500,000 tons of raw sugar to meet the shortfall. Social Situation: The living style and eating habit of people of country has risen in the recent year. Many people become diet and health conscious they start to consume less quantity rural areas consumption of sugar is very high.
Technological Situation: It is a matter of great concern that despite having a strong industrial and agriculture base, the sugar industry is forced to operate below 70 per cent of its capacity mainly because of out dated technology used for the operations. The industry has constantly tried to take advantage of better production technologies since the early stages of development of sugar industry. The process of production include cane grinding to extract Juice, boiling to crystallize, spinning in centrifuge and finally crystallizing, drying and packing of the product. The refining process requires chemicals.
The industry has capital intensive characteristics with less labor requirement. However, the technology used requires low maintenance and repair cost. Some technological advancement has also been observed in some mills in terms of cane Juice extraction and processing. Technological progress over time in the industry has been very slow, mainly attributed to fluctuations in sugar production, under utilization of capacity. Opportunities: Generate revenue for the industry because it is the 2nd largest industry of the country. Provide essential product to other industry. Sugar is vital ingredient in most f our daily consumption.
Firms in the sugar industry should also strive to enter in the energy sector with the permission of the Gobo. Of Pakistan so that they can compete and reach to the particular goals by their own electricity and energy generation. They can also want to provide the electricity to the residential areas as well Threats: Poor management and planning Unable to meet domestic need Lack of technology and modernization Lack of education Poor quality sugar Deliverables: 1 h spaced) Title Page, Intro, Executive summary, acknowledgements Tables, appendix’s etc are NOT included in the main body of the report