A leading English newspaper carried an article clarifying the position of the sugar industry, for which the government serves as the marketing board. Obviously, the sugar industry, which is the main beneficiary of the current policy, is hurt at the unpleasant facts exposure of which tends to demystify the present policy.
The mercenary mouthpiece of the industry in a stinging clarification has tried to justify the pampering of the industry by the government by blaming the well argued case in an earlier article for discontinuation of the flawed policy on phrases like "flying facts" "inspired by ignorance" etc and limitless ignorance on the part of the author of the impugned article.
However, the writer graciously accepts that the sugar industry has failed in many areas and particularly in crushing the entire sugar crop but would like to blame the grower in the same breath for not having achieved a higher yield which according to the author should have been doubled.
The idle capacity of the industry is blamed on the grower. An industry, which cannot crush half the crop, how would it be able to crush twice the quantity?
Any industry in order to survive performs two main functions- production and sale. This political industry cannot produce to capacity and whatever it produces it cannot sell.
It would have gone into receivership in a well functioning democracy. It produces inefficiently at a much higher cost than in the neighbouring country and elsewhere and employs the federal government as its marketing agency. An industry, which cannot sell its sugar in the captive domestic market, would be unable to sell more sugar if it had to crush twice the quantity and thus bankrupt the government in bargain. That an industry has produced huge stocks that it cannot dispose of only reflects on its ingrained incompetence.
Normally every industry takes care of its raw material and the final product. It does not depend on crutches of the government to bail it out of the corner in which it has painted itself.
In the three years that a sugar industry claims to have succeeded in doubling its stocks, with highly adverse impact on prices, revenues liquidity etc is an admission by the writer of massive mismanagement in the industry. Otherwise higher output is a matter of rejoicing.
The sole excuse of the industry to lean on the government to rid it of its stock is the sugar cane support price announced every year as a matter of form. In the impugned article it was very forcefully argued that the government should stop fixing the notional support price. This must be done to deny the industry a solitary excuse of ripping the taxpayer off.
The argument that the demand of sugar is inelastic is highly questionable. There are substitutes to sugar and the demand is not inelastic. It is not one of the most essential items on the menu of the common man.
One would have liked to see some economic arguments from the ghost writer instead of insinuations like ignorance etc. He claims that support price is also fixed for rice, cotton, oil seeds, etc and therefore there is nothing wrong with sugar cane support price. One thought, that the industry was against the support price.
This is simply not true. Except for wheat there is no other support price mechanism in place. An announcement of a notional support price without a mechanism in place is no more than an annual ritual.
Floating of a tender for procurement of sugar by Trading Corporation of Pakistan in compliance with the government directive does not justify the policy of procurement.
Simply issuing a tender does not validate the dubious credentials of the policy. Would a tender justify buying opium or heroin in Afghanistan? The other argument that a meeting had decided that Trading Corporation of Pakistan should rid the mills of its unsold and unsaleable stocks do not lend respectability to a sterile policy, Simply because a meeting was held and a decision was taken by a bunch of official worthies cannot crown the decision with respectability.
The so-called competition is limited to the few pampered sugar mills that are also sick and unable to sell their stocks.
It is not true that other countries also follow the same dead end policies. The consumer in Pakistan would be better off buying imported sugar at Rs 10/kg. as against Rs 23 that he is forced to pay because of the vested interest of the sugar industry, fully abetted by the Government of Pakistan.
The argument that if we stopped producing sugar we will have to import the same at huge cost to our foreign exchange, which for a change is not a limiting factor any more thanks to the enlightened policy of the government. We are sitting on a pile of foreign exchange with no clue as to its uses. But what the author misses is the resources that sugar industry would release for deployment according to our comparative economic advantage, which would result in earning foreign exchange by exporting, say more cotton and/or rice.
That will be a better use of our resources, which are now tied up with moribund sugar industry and sugar plantation. The author has referred to the country's rural development (which) would be hanged through this foreign exchange drain, is a phrase which is highly meaningless.
He does not know we are sitting on a pile of huge foreign exchange for which we have found no use so far. Sugar industry does not provide an ideal socio economic surge as claimed. And the figures of the people it employs are both exaggerated and unsubstantiated.
Another interesting fact unwittingly brought out by the honourable writer of the piece is that the industry has been doing the people of Pakistan a great favour by producing and selling here and abroad, bagasse and molasses etc.
Experts tell me that the industry in Pakistan wishes to make profit by selling sugar at twice the international prices unlike elsewhere where sugar is a by-product and molasses etc the mainstay of the industry.
Lastly the writer in his concluding para has dismissed the most potent argument against sugar cane and sugar industry by saying that farmers know the economics of growing crops better than economists. The writer forgets that grower of sugar cane are as much pampered as sugar industry.
The grower is provided absolutely free water and industry the rebates, subsidies and enormous patronage right from the beginning. Time for mercy killing of the industry has arrived.
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