Not that sweet

Last week, the sugar industry forced the federal government to give into its pressure to allow sugar exports this year. After resisting the sugar mill owners’ demand to allow them to export sugar for over six months, the government has finally relented to allow them to export around 300,000 tonnes of sugar. The agreement came with the caveat that it would continue to allow exports if domestic prices remain stable. The sugar industry had refused to pay sugar farmers, using that as leverage to get its demands met. Farmers’ protests have been reported to have broken out already in a number of areas. The sugar industry claims that it has managed a 1.8 million tonne surplus this year. This has left the government in a tough bind. If it allows more sugar exports, there is little to prevent sugar prices from spiralling upwards. Moreover, the issue of unpaid farmers is becoming a more serious one with the country already suffering from an agrarian crisis for the last few years. Giving in to the sugar mills’ demands seems to be the only logical way out, but non-payment to farmers is not a new issue. It happens every season as the sugar industry continues to act like a mafia when farmers are forced to sell to mills within their districts.

Sugar production does not operate on pure free market principles for the simple reason that too much sugarcane growth would leave little area for growing staple food crops. Arguably, the current crisis shows a need to reduce sugarcane cultivation and sugar production in the country and bring it to sustainable levels. If Pakistan wants an export crop, then it is the cotton industry that should be privileged instead of sugar. However, the trouble is that such a strong will is unlikely to be shown. The decision to delay the export decision in the first place – if they were to be allowed – shows that the planning priorities at the highest levels are not clear.  The government could have used a phased approach to see what impact exports might have on the local market for sugar. The last time a government allowed exports during a surplus period – for wheat in the Musharraf era – the country was left facing a shortage. In a sense, the government has allowed the sugar industry to blackmail it. It might be forced to let the industry export more sugar. There was a case of market imbalance, more production than demand. The case to reduce sugarcane cultivation in the country should be considered seriously. Farmers should not end up paying the cost; the government should never allow an industry to delay payments to farmers. The government needs to re-orient farmers towards producing staple crops that can help feed the population. Excess sugar production is not the most urgent need.