KARACHI, Aug 25: The lopsided sugar policy continues to hurt interests of consumers, growers and the industry alike.

Sugarcane support price in each province is fixed by the provincial governments whereas sugar price and its imports are regulated by the federal government.

Consequently year after year, the country has to face sugar crisis because there is no relevance between sugarcane support price and open market rates of white refined sugar.

Undoubtedly the government should ensure that growers get their due price for the cane, but similarly it was important that sugar industry’s viability is also not compromised.

As a result of tussle between the industry and provincial governments over the sugarcane support price, each year crushing season is delayed which ultimately disturbs demand and supply, thereby having an adverse impact on price of sugar in the open market.

Sugar is an essential commodity as its consumers have no class and is an equally important daily kitchen item for the poor and the affluent.

Therefore, slight variation in sugar prices has a wide and severe impact on a cross-section of society which no government likes to face.

Sugar crisis had always been prone to political exploitations. In the late 1960s, it was the sugar price which became the cause of overthrow of the Field Marshal Ayub Khan government.

Other major cash crops, like cotton and wheat, have unified policy and are being regulated by the federal government alone. The support price for phutti (cotton-seed) is fixed by the federal government and so is the procurement price for wheat.

Unlike sugar and cane, one does not see any price conflict in these crops because the federal government after ensuring proper return to growers on fixing minimum support price leaves their marketing on free trade which determines their prices based on demand and supply mechanism.

Whereas in the case of sugarcane, price is fixed by provincial governments - Sindh, Punjab and NWFP - but of sugar the price and its imports are being regulated by the federal government, thereby causing deceptions at each stage, starting from sowing, harvesting, crushing and up to marketing of sugar.

Therefore, it is not surprising a commodity regulated by more than one agency at different levels.

This situation creates a lot of mistrust among stakeholders which ultimately gives birth to many other issues, like ‘price war’ between sugar mills and cane growers, delay in start of crushing season and delay in payment by millers to growers.

But worst scenario emerges when issues of support price and starting of crushing season crop up each year and both the provincial and federal government functionaries get involved in order to resolve them.

However, in most cases commitments and agreements are reached between millers, provincial and federal governments after a lot of bickering and wastage of time.

The industry had been complaining that each time government enters into negotiations and reaches agreements for early start of crushing season, but these are never fulfilled, particularly when sugar mills once start operations.

Besides, intervention from the state-owned Trading Corporation of Pakistan (TCP) also causes price drop in the open market which hurts industry’s interest and makes its entire production activity unviable.

Undoubtedly it is the responsibility of the government to also protect consumers interest by ensuring that no profiteering is made by the industry or commercial traders by maintaining balance between demand and supply, but it was equally important that this should not be done at the cost of industry which is entirely agro-based and provides job opportunities to rural areas of Punjab, Sindh and NWFP.

The representative body of sugar mills has already warned the government that upcoming crushing season in November 2007 would be delayed by at least three months because of huge opening inventory of sugar.

The industry claims that over one million tons sugar worth around Rs23 billion would be available which will depress prices once the industry starts crushing season in time.

According to industry sources, after 3.526 million tons production during the current season (2006-07), total available stocks of sugar in the country stood at 4.828 million tons on adding 1.310 million tons held by the TCP and commercial importers.After meeting the domestic demand of around 3.8 million tons for the entire season, the country is expected to have a surplus of around 1.02 million tons, which would be the opening stocks for next crushing season.

Keeping in view the monthly consumption of around 350,000 tons, the opening stocks of around 1.02 million tons at the start of new crushing season in November 2007, would be sufficient for the next three months.

The sugar industry is the second largest agro-based industry of the country, contributing two per cent to the GDP and having a share of 12.8 per cent large-scale manufacturing sector.

The industry provides employment and livelihood to millions of farmers, factory staff and others indirectly associated with the sugar sector.

Sugar manufacturing activity generates around Rs15 billion in various government taxes and duties.

Of 880 goods and services in the GST net, the sugar industry contributes around Rs10 billion and stands fourth in term of its contribution to the national exchequer.

It meets the entire demand of the country and is capable of entering export market in the light of recent WTO ruling requiring withdrawal of heavy sugar subsidy given by the developed countries.

Therefore, it would be in the best interest of all stakeholders in the sugar trade, from growers, industry and end-consumers, that entire process is regulated by the federal government, including fixing of support price for cane, monitoring of stocks and open market price.

Since it is an agriculture product, there is always fear of seasonal impact on its production which means in case of shortages, the federal government has been already regulating its import as well.