KARACHI, Feb 7: Having gained unlimited financial resources from the ultra liberal and a virtual free for all credit policy of the State Bank in the last four years, a small group of manipulators in the commodity market has managed to push up sugar prices beyond Rs40 a kg this month when crushing is expected to be at its peak and mills inventory of sugar is full to the brim.

These manipulators play their role with the growers and millers and bring about a deadlock. They are active in import and are closely linked with global commodity operators. They take full advantage of the consumers’ distress and are the same importers with different names for buying wheat, sugar and other commodities.

They are faceless but carry a name that rules and dominates the commodity markets. The name of a commodity broker from Thana Bula Khan is now being frequently referred to in transaction of the commodity ships in the mid seas. He is involved in ownership transfer of at least half a dozen sugar mills in Sindh.

This season sugar mills started cane crushing in the last week of December 2005 only after President Pervez Musharraf intervened. The president held a meeting with the millers and growers in Hyderabad in the last week of December. The problem began when the mills refuse to lift sugarcane at Rs48 for 40 kg fixed by the Sindh chief minister. In president’s meeting, a compromise price of Rs60 for 40 kg was said to have been fixed.

Instead of waiting for the sugar mills in their immediate neighbourhood to lift sugarcane, the growers in Sindh approached the mills situated in other areas and even in Punjab. They got prices at Rs70 for 40 kg and now the millers in Sindh complain that they are not getting sugarcane even at Rs100 and Rs110 for 40 kg from the growers of their province.

“Why should I give my sugarcane at lower price to the miller when I am being offered a higher price by the other miller,” said Syed Qamaruzzaman Shah, a leader of the Sindh Chamber of Agriculture.

“Punjab millers want to give a final blow to the sugar industry in Sindh,” a leader of Sindh millers complained. He said there were about half a dozen big sugar mills in Punjab that have better access to bank loans, enjoy government support and are actively involved in sugar import and trading in the local market and hence have developed a well knit network in all the four provinces.

Mr Qamaruzzaman said that quite many sugar mills in Sindh had been sold out in the last two years. The growers are no more interested to cultivate sugarcane as it is a water consuming crop that involves too much time. “Sugarcane cultivation has ceased to feasible for the small farmers who would now opt for sunflower or other crops,” he said.

“The matter worth investigation is the sugar inventory in Punjab mills and why these mills are hoarding the commodity and not selling their commodity to the wholesalers and then onward to the retailers,” a sugar watcher said.

Taj Haider, a former PPP senator, wondered as to why the millers were allowed to delay the crushing till late December when it is due in Sindh by October 15.

He recalled that the millers had used the same black mailing tactics in 1994 when they decided to put off crushing beyond October 15. “The millers were invited and were informed of the power and authority available to the government under the Sindh Sugar Factories Control Act,” he said. Under this act, the cane commissioner has the powers to take control of sugar mills and put owners in prison if they refuse to start crushing by October 15. The growers were promised a premium on higher fructose content and it was paid.

Then in 1994, Senator Aftab Sheikh of the MQM had prepared a detailed report of the sugar industry in which Taj Haider’s observations were also incorporated. This report can still serve a reference document.

Raeed Ashraf Tar Mohammad, a leader of the grocers group, doubts the effectiveness of the government scheme to bring down sugar prices in the market. Under this scheme, the retail outlets, which are registered with the sales tax department, are authorized to buy sugar from the Trading Corporation of Pakistan.

“Under the government’s policy, the retailers having less than Rs5 million annual turnover are exempted from registration with the sales tax authorities,” he said. The market price for majority of the consumers is determined by the small outlets which are excluded from the government scheme.

The manipulators play their roles to delay the cane crushing by the sugar mills. The reason for delay in cane crushing is sugarcane prices. The sugar mills want to pay low price and pressurize the growers by refusing to lift sugarcane from the fields and delay the crushing.

In yester years, the growers had little option before such pressures and they quickly bowed down. In the last three years, the farmers got about Rs200 billion bank loans. About two dozen south Punjab families of landed gentry are said to have obtained a lion share from these loans and have made billions from selling agricultural produce at premium. These families with their network in the rural areas of Sindh, Punjab, the NWFP and Balochistan book the crops of small farmers in advance.

As there are a handful of powerful growers, there are about half a dozen millers that enjoy tremendous clout in the government and there are a small number of commodity brokers who create conditions of scarcity in the market that warrant duty free import.

Wheat, sugar, vegetables and pulses have been imported under distress on which the government offered duty free concessions and subsidy on marketing. On wheat trading, the government offered Rs56.7 billion subsidies since 1998-99 to 2003-04, but flour prices never went down below Rs12 and Rs13 a kg.