The sugar crisis

The Minister for Industries and Production Mian Manzoor Ahmed Wattoo announced what is being considered as an inexplicable decision: the ex-mill sugar price of 48 rupees per kg in Sindh and Rs 49.75 in the other three provinces. The actual cost, so allege many an analyst, is no more than Rs 30 per kg.
This decision was taken after a five-hour meeting between the federal government team led by Wattoo and representatives of the Pakistan Sugar Mills Association (PSMA) accused of hoarding and staying the implementation of an earlier Economic Co-ordination Committee (ECC) meeting decision that had approved the import of sugar by the Trading Corporation of Pakistan with the objective of forestalling an expected supply shortage. PSMA's objective: to allow an artificial shortage that would chivvy up the price of their product, especially after the advent of Ramazan.
This appears to be exactly what has happened. And most disturbingly, this would not have been possible without government complicity as the price was agreed to by Wattoo. That the international price of sugar has increased considerably, since the ECC decision was taken in this regard, would imply a doubling of our sugar import bill, a serious deterrent to our foreign exchange reserve-strapped economy at the moment.
What has amazed the general public is that, in spite of the airing of general dissatisfaction over the rise in sugar prices Wattoo was allowed to make the 'deal' with the PSMA and no other senior member of the government, including the Prime Minister, has so far commented on this. Additionally and more baffling, was the silence of the PML (N) on Wattoo's deal on the floor of the House where point-scoring with the MQM, as well as on Musharraf's accountability, were the subject matter of debate. It is precisely this quietude on the part of the Opposition - be they from PML (N), PML (Q), or any other elected representative - to the deep concerns of the general public at present, with respect to sugar prices that has led to a widespread interest in knowing where the ownership of the sugar mills resides. Out of a total of around 74 mills in the country, 40 are in Punjab, out of which 20 are owned by politicians, most of whom are in the federal or provincial legislatures. In Sindh, there are a total of 28 sugar mills, out of which around 12 belong to politicians, while in the NWFP one political family owns six mills. All mill owners are united under the PSMA umbrella.
What has also amazed analysts, with respect to Wattoo's deal with PSMA, is the fact that he agreed to a sugar price differential within the country. A first year student of economics or indeed any successful smuggler, and Pakistan has a rather large share of that business group, would argue correctly that a price differential between countries leads to smuggling, as the product is sent to the country where the price is higher; but to have a price differential within a country is to almost guarantee that the sugar in Sindh would find a way to the other three provinces, in search of higher profits. Why was this allowed? Perhaps the answer is again to be found in the membership of the PSMA.
It is sincerely hoped that the Peoples' Representatives Act according to the wishes of their constituents, which are clear in this matter. The Punjab government has lamented the deal struck between Wattoo and the PSMA and alleged that this deal has tied their hands in terms of continuing their raids. While this maybe true, yet it is the need of the hour for the Punjab government to provide proof that senior executives of the ruling party were not complicit in the infamous Wattoo deal, as must those who are part of the ruling party at the federal level.