THE sugar sector reforms suggested by a ministerial panel last week can be a major leap towards deregulation of the sweetener’s trade. But, at the same time, the proposed reforms underscore the predicament of the Imran Khan administration. It wants the government to get out of the sector and yet it has been reluctant to recommend its complete withdrawal from the market. The ruling party’s hesitancy is understandable given the political nature of the commodity with the involvement of millions of cane growers across Punjab and Sindh as well as influential political families straddling the party divide. The financial interests of the bureaucracy in continuing its hold over the sector is another obstacle towards complete deregulation of sugar trade in the country. The panel — the Sugar Sector Reform Committee — was formed by the government of Prime Minister Imran Khan in the wake of an extensive federal inquiry against the sugar factories and is supposed to look into different aspects of the commodity’s trade following the 2019 winter shortages that led to a swift price hike. Most of the suggestions put forward by the committee after one and a half year of deliberations have been on the table for long and require a major shift in policy. But no government has dared to implement them for fear of a political backlash from the growers and factory owners.

For example, the proposal to end the support price for the sugar cane crop will not be liked by the big growers who have a strong presence in parliament. Likewise, the suggested changes in the provincial laws to put an end to crop zoning to give growers the option to decide what to grow and what not to will be frowned upon by mill owners. The abolition of the Sugar Factories Establishment and Enlargement Act, 1966, to allow anyone to set up a sugar mill to break the cartel of the factory owners will also not sit well with the wealthy millers. These are all steps towards deregulation of the sector and the improvement of its governance. But the proposals to allow sugar import while controlling the export of surplus or imposition of fines on delays in crushing etc. show that the government is still not ready for a totally deregulated sector. Still, the panel’s recommendations can be the first step towards reducing sugar price volatility and deregulating the market in the country.

Published in Dawn, December 21st, 2021