October 20, 2003	Monday	Sha'aban 23, 1424

The sugar industry of Pakistan has developed into a nagging, near perennial issue. There is the question of clearing back payments to growers practically every year. Now the issue of stocks has also come up with the implication that if the government does not bail out the industry, crushing season would be delayed.

This of course implies delay in payment to cane growers who have nowhere to go because dues for previous years have not been cleared in many cases. Another fall-out of delayed crushing, which means late harvesting of the cane crop, would be delay in cultivation of wheat in fields occupied by sugar cane, undermining the produce of the next wheat crop.

The Pakistan Sugar Millers Association (PSMA) has taken the stand that it cannot undertake crushing as long as it has sugar stocks of about 0.760 million tonnes at its hands. It wants the government to help it manage these stocks. This actually amounts to demanding that the government should purchase sugar available with millers. Reference to crushing is akin to the demand being made at gunpoint.

Major landowners have no problem of unpaid dues from sugar cane factories as they either own mills or are influential people whose payments are secure. Small farmers are at the receiving end, more so as many sugar mill owners are well connected individuals with access to decisions-making levels.

While the present administration has staggered into crisis after crisis, the cane controversy is not of its making; it is an inheritance from the Nawaz government but an area to which the Benazir regimes, particularly during the second PPP government also made a contribution. But the influence of sugar millers is not a story of the past; many of them are well entrenched in the present set-up also.

The interest of the leadership of the Pakistan Muslim League in sugar cane is well known. Its former prime minister had a stake in marketing machinery for sugar mills. The machinery’s price was raised by official approval during the PML government; the PPP administration further enhanced it.

The next PML government took it to an even higher keel. An official of the NDFC who refused to do the government’s bidding was summarily removed. That forced or enabled investors to obtain loans at high interest rates. The cost made a sugar mill non-viable at the very outset so the mill owners tried to cut corners. The easiest turn was small farmers who were made to wait at the gates of sugar factories for days to sell their produce; their cane lost weight under dry conditions, causing farmers additional financial losses. Then they were given dates for payment that were kept only by some fair millers; others linked payment with the sale of their produce.

Marketing sugar was not a major problem under the two political governments, particularly under the PML. The sector was accorded concessions and facilities and sugar was exported even to destinations that were believed to be out of bonds for Pakistani businessmen. The sugar industry thrived though the taste of sugar turned bitter for farmers who provided raw material to the mills.

Three provinces, Punjab, Sindh and NWFP cultivate cane and have established sugar mills. Sindh and NWFP often have problems and differences between millers and growers but they do not turn into a raw deal for the later in these regions; Punjab, with the maximum number of mills installed in the province, has been a different and, by and large, an uneven playing field.

Growers have been exploited no end in Punjab and the situation has further deteriorated under the present government as it paid no attention to the sector. It has limitation as some of its leading personalities have heavy stakes in the sugar-milling sector.

The present government has been too busy on higher planes to think of such insignificant matters as cane growers and sugar industry. Its inattention allowed the problem to develop into an explosive situation. there is no escape from it now.

If the miller’s point of view were not accepted, the next wheat crop would be impaired even before it is sown. So the authorities cannot afford to put off a decision much longer. However, the issue has become a coin that, for the government, has the same design on both sides. Heads or tails, it is a losing call for the administration.

But it can take a stand that has bearing on the future. That can be done only if sugar millers, now holding the authorities virtually to ransom, are not allowed a say in decision-making. That seems difficult as some sugar millers wield considerable influence over the administration; they have access to both Jamali and the General. They are in fact an important component of the administration that cannot be ignored.

The task before the government is simple: either it deals with the issue in an equitable manner or patronizes vested interests. The government can unfortunately not adopt a hard position as sugar mills in the public sector that could be used to create a balance in the sugar industry have been off-loaded. The stark choice is between purchasing the stocks to ensure timely wheat sowing in cane fields or looking the other way when the wheat crop is delayed in vast areas.

However, if the authorities capitulate, the sword of delaying wheat would be brandished against it in future also. What it can do is assure the industry of maximum help but make direct payment only to farmers for their standing crop. A more effective approach that can settle sugar industry issues for a long time if not for once and for all would be compensating farmers for their present crop, telling them to clear the fields for wheat and ask the sugar millers to resolve their problems on their own.

They did not over produce and accumulate stocks because of any assurance from the government; there is no reason or argument for the government to bail them out. The decision to over-produce was their own so the stocks should be their responsibility. Hopefully, the authorities would show the courage to do what is in the national interest.