PAKISTAN’S agricultural sector is under transformation, and the signs are obvious. From research on agriculture, lending to small farmers and improvement in farming techniques to the marketing of farm produce and exports of grains and food products, things are changing.

More encouragingly, change is also evident on a deeper level, including in the areas of policy justice, fair play, appropriation of subsidies and support prices, and implementation of the rules of the game. However, the change is painfully slow at this level, and the forces that feel threatened have started resisting.

The ongoing tussle between sugarcane growers and millers is a symptom of an underlying, neglected disease. Analysts have long pointed out that allowing unchecked growth of sugar mills, set up mostly by those in or around the government of the day, was a policy mistake.

Issues that keep our agricultural growth from accelerating are too many and varied, but some of them revolve around support prices and subsidies.

Leaving cane growers at the mercy of politically powerful sugar millers, who habitually delay payments to suppliers, was an administrative weakness. And letting sugar tycoons to export the sweetener and get export rebates was the result of an oversight at political, policy and regulatory levels.

All of this is changing somehow. The Supreme Court has thrown the weight of justice behind growers to ensure fair play between them and sugar millers. At the same time it has accepted for hearing a petition filed by the Sharif family against a September decision of the Lahore High Court ordering the shifting of the sugar mills set up by the family in southern Punjab.

Authorities concerned are investigating why in the past political bigwigs set up sugar mills in areas where no new mills should have come up under the crushing zone policy, which seeks to protect the interests of cane growers.

The State Bank of Pakistan (SBP) has asked banks to ensure that export quotas are issued to only those sugar mills that began cane crushing by Nov 30 and that have a proven record of timely payments to cane growers.

The Trading Corporation of Pakistan (TCP) now also has the guts to say no to powerful sugar mills if they fail to establish that they have settled payment claims of cane suppliers.

These changes have originated right from where political linkages of sugar tycoons rest: national policymakers sitting in Islamabad.

Annual growth rate of the agricultural sector averaged 5.4 per cent in the 1980s, but then slipped to 4.4pc in 1990s and then to 3.2pc in 2000s, according to the Pakistan Bureau of Statistics.

Since 2010, the sector’s growth has generally ranged between 2.1pc and 3.5pc, with the exception of the 2015-16 fiscal year when it plummeted to 0.3pc, SBP data shows.

Issues that keep our agricultural growth from accelerating are too many and varied, but some of them revolve around support prices and subsidies. Inefficient, non-transparent policy implementation feed some others.

Take for example the case of fixing procurement price of sugarcane. Provinces do this at the beginning of cane harvesting season. Sugar mills are supposed to start cane crushing by the deadlines set by provincial authorities. But delays occur, and it’s an open secret that they are generally deliberate.

The longer the growers wait for the announcement of the procurement price and beginning of cane crushing, the easier it becomes for powerful sugar mills to force them to agree on selling cane at low prices.

That’s why we keep hearing from growers that they are not even getting cane prices according to the rates notified by the authorities. “In fact, poor and helpless growers are left with no option but to agree on selling cane to sugar mills at the rates set by the mills. This is done verbally. When the official price is notified, it is shown on papers only,” a former cane commissioner of Sindh said.

This happens in Punjab as well. In both provinces, some millers even resort to deduction while purchasing sugarcane from growers. They pay the growers price for 37.5kg instead of 40kg, growers claim.

Officials of the Pakistan Sugar Mills Association claim this is done in some areas only where the sucrose content of sugarcane is below the average. And they flatly deny any buying of sugarcane below the fixed minimum procurement rates.

“After an increase in the outreach of banks to farmers, small growers are not as much in a hurry as they used to be in the past to sell their harvest,” a Sindh-based sugar miller said. “Previously when they were almost solely dependent on expensive borrowing from traditional money lenders, growers desperate to sell their produce used to accept unjustified demands of millers.”

It is true that banks are not only lending more to the agriculture sector but their lending to small farmers is growing faster. In the last quarter of the previous fiscal year (ie April to June), 44pc of all loans meant for crop cultivation went to farmers of subsistence holding, according to the SBP data. More recent stats are not available.

However, the clout of our powerful sugar tycoons is evident from the list of the mills whose export quotas have recently been approved, cane growers say, suggesting that some of them, owned by political families, have got larger quotes without merit.

That list, seen by this writer, apparently lends credence to their apprehensions.

Published in Dawn, The Business and Finance Weekly, January 22nd, 2018