The Competition Commission of Pakistan (CCP) subsequent to an open hearing attended by all stakeholders on 25 January 2018 has formulated a number of recommendations designed to make sugar industry more efficient, improve sugarcane quality, enhance and diversify production process and focus on export competitiveness. The list of recommendations include abolishing the support price of sugarcane, and if the support price is to be set by the provincial governments then all factors must be taken into consideration, including accessing reliable data (data presented by Sugar Mills Association is at variance with data present by government sources), taking stock of divergent conditions and factors prevalent in different provinces/areas (the sucrose content of sugarcane crop varies in different provinces and within areas of different provinces as does the support price announced by different provincial governments) and consider extending support to any other crop particularly cotton. This last factor is extremely critical as flawed administrations' policies account for the gradual shift away from area under cotton cultivation (the largest export earner of the country) to sugarcane output which has required an export subsidy from our scarce resources to enable sugar mills to export the rising sugar stocks.
Pakistan's existing sugar policy - from sugarcane cultivation to sugar manufacturing to stockpiles leading to consideration of an export subsidy - accounts for the following disturbing trends: (i) a negative impact on cotton output which, in turn, accounts for lower cotton value-added exports as higher imports of raw cotton implies higher input costs relative to international competitors; (ii) sugarcane requires a lot of water; whereas Pakistan is water-stressed country; (iii) sugarcane comprises 80 percent of the cost of sugar therefore its price has to be realistic for consumers; (iv) negative impact on the budget deficit as rising sugar stocks have led to the need to export surplus sugar which is not possible without a subsidy as the international cost of sugar is lower than our domestic cost; and (v) to draw from Shakespeare, the "unkindest cut of all" is the persistent failure of sugar mill owners to clear the sugarcane growers' dues which they attribute to unrealistic support price announced by the provincial governments.
The CCP recommendations include that Trading Corporation of Pakistan maintain minimum stocks of sugar to address any unanticipated demand surge - an entity that has been accused of irregularities at public expense; and rightly suggests that provincial governments review the legislative framework and open competition in the sugar sector. However, the CCP failed to focus on the sugar manufacturers who consist of the Who's Who of our politicians with former President Asif Ali Zardari as well as Nawaz Sharif and family reportedly owning several sugar mills. Thus the ownership of sugar mills that accounts for the general perception that the country's sugar policy is designed to favour the already favoured, who have the additional advantage of actually formulating and then implementing policies with respect to the sector, was unfortunately not the focus and therefore the main stumbling block in the sugar sector's flawed policies was not tackled.
Given the scenario prevailing in the sugar industry and the frequently reported required remedial measures highlighted by various sugar sub-sectors (from growers to exporters that needless to add are biased in favour of the sub-group recommending a particular policy action) the CCP's recommendations are not specific and appear to be simply a reiteration of what has already been said. What was required is for the CCP to take effective punitive measures against all those operating in the sector who are defying the competition laws of the country. That unfortunately was not done.
Comments
Comments are closed.