The sugar industry enjoys unmatched influence, but policies favouring sugar mill owners come at the cost of cotton- growers
A major hike in product prices has once again brought the sugar industry into focus. Raids are being conducted against hoarders and stocks being confiscated to manage the shortage in the market and to bring prices down. Demands by various quarters for regulators to take action against cartelisation in sugar industry are becoming more aggressive with each passing day. It is alleged that major players in the industry manipulate trends to their benefit and make profits even if they come at the cost of public money.
The sugar industry is controlled primarily by people with strong political connections and say in the power circles; these are the people who have the power to make policies. The leaders of almost all the major political parties in the country own sugar mills, making for a point of convergence despite their political/ ideological differences. Safeguarding their financial interests is always an important concern. To name a few, sugar mill owners include Jehangir Tareen, Makhdoom Khusro Bakhtiar, Chaudhrys of Gujrat, Hamza Shahbaz Sharif, Asif Ali Zardari, Zulfiqar Mirza, Humayun Akhtar Khan and Haroon Akhtar Khan.
As the sugar industry is concentrated in south Punjab and northern Sindh, the increase in the cultivation area of sugarcane in this region is natural. This has definitely come at the cost of cotton crop which is the major raw material for the textile industry. The fact that the government has fixed a minimum price for sugarcane crop and not for cotton has gone in the favour of the former and the farmers feel more comfortable growing this crop. The minimum price set for sugarcane is Rs190 per 40 kg. The farmers can sell it for a premium if the demand increases. Another factor is that sugar production is more than its domestic demand.
Today, the situation is that Pakistan is consistently facing a shortfall of cotton and has to import huge quantities to meet its domestic demand as well as to produce goods meant for exports. Besides, cotton is vulnerable to diseases in the absence of certified quality seed, especially the BT cotton seed. Sugarcane, in contrast, is a safe bet. The farmers feels so safe some of them are opting for sowing sugarcane twice a year.
If we look at the history of how this imbalance came about, we find that sugar mills in central Punjab started relocating to south Punjab where the quality and yield of sugarcane is better. The same is the case in upper Sindh because both are tropical areas or most similar to tropical areas and sugarcane is a tropical crop. The same belt was known earlier for producing the best quality cotton in the country. To check this trend, a ban was imposed on setting up sugar mills in the area as well as relocating the existing ones. Anyhow during Musharraf’s regime, two tycoons in the sugar industry got a special favour from the dictator and managed to set up sugar mills in south Punjab.
However, in 2018, Lahore High Court (LHC) ordered relocation of three sugar mills owned by Sharif family from the cotton growing area in south Punjab to their original location after dismantling of their machinery within two months of the ruling. The decision was upheld by the Supreme Court of Pakistan (SCP) where an appeal against the verdict had been filed.
A sign of the influence the sugar mill owners enjoy in the power circles is that they can defy the government orders without fear of any punitive action.
Another sign of the influence the sugar mill owners enjoy in the power circles is that they can defy the government orders without fear of any punitive action. Though it is mandatory for them to start crushing on October 1 in Sindh and October 15 in the Punjab, they drag it on till December or January to maximise their profits. This delay is intentional because with the passage of time, the moisture in sugarcane decreases and the percentage of sugar content increases. The fact that the weight of sugarcane decreases with moisture loss benefits the mills because they has to pay less in this case. Every year, they delay crushing citing various excuses but the concerned departments are unable to take action against them.
Secondly, as per law the mills are required to pay the farmers within 15 days of the delivery of sugarcane but they keep on delaying the payments which deprives them of money required to sow the next crop.
Thirdly, the sugar mill owners get an extraordinary favour from the government in the form of subsidy to make their sugar competitive in the international market and export it. If this does not happen, the sugar produced in Pakistan cannot compete in the international market for being too expensive. The taxpayers have to bear the brunt as this subsidy comes from the tax money. Instead of nudging the industry towards self-sufficiency and cost effectiveness, the government keeps on providing crutches to it.
The sugar industry does costing on the basis of sugar output only while it also earns handsome amounts from sale of byproducts. Molasses is used in production of ethanol, bagasse (pulpy residue) for electricity production and consumption in chipboard industry and whatever is left is sold as organic fertilizer.
On the other hand, the cotton shortfall has been increasing and imports are expected to reach 6 million bales during the current season to meet its demand for 16 million bales. The arrival of cotton in the ginning factories fell to a 16-year low of 8.33 million bales in January 18 after pest attacks affected the crop.
Apart from a fall in cotton growing area, the vulnerability of the crop to several diseases and the absence of a support price have deterred farmers from growing it. Unfortunately, the agricultural institutes have not succeeded in producing quality seeds and the process of certifying seeds is too slow. The Pakistani farmers buy substandard, fake and smuggled BT cottonseeds from the market which do not suit the local conditions and have an adverse impact on the yields. The BT cottonseed has to be developed according to the local conditions and the needs of the soil, the plant and the types of threat faced.
A comparison of conditions in Pakistan and India is relevant here to show the effects of the neglect shown by the former’s government and agricultural research organisations and departments have had on cotton crop. In 1992, the per hectare yield of cotton in Pakistan was 750kg lint per hectare which today stands at 690kg. On the other hand, India had a yield of Rs 250 kg lint per hectare in 1992 which has now reached around 600 kgs per hectare today. India produces certified BT cottonseed and the government sets support prices for cotton crop.