The Punjab Assembly last week passed “The Sugar Factories (control) (Amendment) Act,” reversing all ‘pro-farmers decisions’ it had taken in the two ordinances at the start of last crushing season and claimed much credit and political mileage out of them.

The Act has drawn sharp and negative reaction from all sides, except of course from the millers who are now being accused of manoeuvring their way through the provincial government and assembly at the cost of farmers.

All farmers’ bodies are threatening protests, picketing the Punjab Assembly, sit-in in front of the CM House and a march on Islamabad. The Food Department denies, rather vehemently, proposing it and says it was also surprised, if not shocked, to receive it through the media.

Independent analysts, like Dr Iqrar A Khan, former vice-chancellor of the Agriculture University (Faisalabad) and author of an agriculture policy for Punjab, calls the act “a black law, which legalises exploitation and is designed to hurt farmers and farming in the province.”

‘The Act adversely impacts everybody — the government politically, growers financially and consumers with the ever-increasing cost of sugar’

The context of the passage of the act is interesting. When the sugar crisis hit the country last year, the (food) department was tasked to come up with solutions. It proposed some legislative and administrative measures to deal with the situation. Since the crushing season was around the corner, it was decided to move ahead with ordinances rather than the time-consuming legislative process.

Therefore, two ordinances to fill the legal gap were promulgated. They were issued in September last year, empowering the Punjab government to decide the date of the start of the crushing season, making reduction in weight and non-payment of dues cognisable offences as well as ensuring payments on cane purchase receipt (CPR) within 15 days. It was on the basis of these ordinances the Punjab government was able to get the season started in early November last year, twist arms of the millers and ensured rate and payments to farmers. Offending mills were even sealed.

Both the ordinances lapsed in December and were renewed. When the renewed ordinances expired by the end of March, the Punjab Assembly moved in to find a permanent solution. The Act, which was supposed to formalise these ordinances into law, actually did exactly the opposite. Instead of letting the government decide the date, the Act has resumed the date of November 30 — a date given in the sugar factories control act (1950) — for the start of the season, ignoring all varietal improvement and changes in farm practices in the last 70 years. Sugarcane varieties now mature early and any delay in crushing hurt farmers financially and give millers room for exploitation who threaten delay till last moment and bargain on rates and weight. The scenario gets nastier during the time of glut, causing bigger losses to farmers.

The Act has also taken the procurement and payment processes out of police jurisdiction. They all have been rendered “non-cognisable” and only a complaint (on a simple paper, without any legal value) can now be lodged, but no FIRs. The Act has thus brought the situation back to square one as far as the government initiative to implement the ‘crime and punishment’ concept in the sugar making process is concerned.

The most lethal parts of this Act, which the farmers think are criminal, is time, mode of payment and the process of recovery of dues from the defaulting mills. The millers were getting sugarcane on 15-day credit; it started with a non-paper but had almost assumed the proportion of legality, but has been done away with through this Act. The Act says that “occupiers of sugar factories shall clear payment by June 30, following the crushing season,” effectively making it an eight-month credit cycle.

This is what has created a storm in the province. Khalid Khokhar — president of the Pakistan Kissan Ittehad — articulates popular resentment in these words: “No one knows who gave the right to the government and even legislature to decide the terms of sale on behalf of a farmer. How can anyone tell a farmer to sell his commodity on eight-month credit? Is this not an attempt to give legal cover to the exploitation of farmers?” The farmers are getting ready for action, and it would be sooner than later, he warns.

The two expired ordinances had given a “dispute resolution mechanism and method for recovery of dues” — empowering the Cane Commissioner to arbitrate, decide and also fix the liability in case of any dispute. He was also given the power to proceed with the recovery of dues by linking land revenue of the defaulting mills. The recent Act has withdrawn these powers.

Another caveat is that each decision of the commissioner has been made as “liable to appeal to the secretary food.” It has rendered the cane commissioner irrelevant to the process and more of a ‘bystander’, as a former cane commissioner puts it.

The Act also did away with bank payments. The ordinances had bound the millers to pay farmers through their bank accounts. It was supposed to serve a twin purpose: millers would not be able to reduce payments on any excuse and the purchase amount would also help determine the cost of production of sugar at later stages and make the determination of ex-mill price easier. With millers now allowed to pay through cash, both efforts — saving farmers from exploitation and document sale and purchase of mills — would be next to impossible to maintain.

“The Act is an exercise in self-defeat, which would adversely impact everyone — the government politically, growers financially and consumers with the ever-increasing cost of sugar,” concludes Iqrar A Khan.

Published in Dawn, The Business and Finance Weekly, May 24th, 2021