Saturday, 10 January 2015

Political impact

The story of politics of sugar in Pakistan actually moves around politics of the country. Most sugar mills in the country are owned by different political families and their relatives. The political elite, which comes up in different governments or in opposition, is the biggest beneficiary of such crisis.
In 2006, during the days of sugar crisis, the National Accountability Bureau (NAB), in its report before the Supreme Court of Pakistan mentioned that many politicians have monopoly on the sugar industry and that they are creating sugar crisis through hoarding.
The report named the then president of Pakistan, Asif Ali Zardari, Nawaz Sharif, Shahbaz Sharif, Chaudhry Shujaat Hussain, Jahangir Tareen, Mian Azhar, Anwer Cheema, Nasrullah Dareshak, Haroon Akhtar, Mian Altaf Saleem, Shamim Khan and others.
Supreme Court’s former chief justice, Abdul Hameed Dogar, closed the case. Most politician owners took loans to set up sugar mills on soft terms during military dictator Ziaul Haq regime, a practice which also continued later.
At the moment, there are 86 sugar mills, according to an official of Pakistan Sugar Mills Association (PSMA). At the time of Indo-Pak partition, there were seven sugar mills in Pakistan, five in East Pakistan (Bangladesh) and only two in West Pakistan. By 1980, with the increase in demand and population, there were 35 sugar mills in the country capable of providing 1.0 million tonnes.
Ten more sugar mills were set up in 1990, which went up to 86 in the next decade. By 2006, the government imposed complete ban on setting up new sugar mills and expanding the existing mills.
According to reports, Pakistan Muslim League-Nawaz dominates the sugar industry in Punjab, with about a dozen of its leaders, including its chief Nawaz Sharif, owning sugar mills. The Sharif family tops the list with nine mills, while some mills are owned by other leaders.
“The ban has further increased the monopoly of sugar mills, mostly owned by politicians, in the country and led to different exploitations, including paying less to the farmers (sugarcane growers) and becoming a cartel to mint money through hoarding, etc,” says Hamid Malhi, who represents Farmers Association of Pakistan (FAP). “They relax the ban whenever they want to favour someone,” he adds.
Pakistan is the sixth largest sugar producer in the world. Its 86 sugar mills have the capacity of producing 7.0 million tonnes of sugar annually. With full capacity utilisation that would need supply of 80 million tonnes of sugarcane, the best being 53 million tonnes in 2007-08.
Last month, the Economic Coordination Committee (ECC) of the cabinet approved a subsidy of Rs10 per kg on export of 650,000 tons of sugar. This would cost Rs6.5 billion to the government. However, sugar millers want subsidy on total production this season instead of on the allowed export quantity.
At the moment, most of the sugar mills in Sindh have suspended sugarcane crushing for an indefinite period. The production will remain suspended unless the government cuts sugarcane prices or grants at least Rs10 per kg subsidy on sugar production.
Mill owners have demanded to revise the sugarcane support prices to Rs155/40 kg in the province from Rs182/40 kg. This price, millers claim, is unpayable as sugar prices in the domestic market have fallen.
Malhi further says that such lobbies and mafias stop benefits from flowing to the farmers and growers. “Naturally, these lobbies, especially when they have political roots, look for their vested interest.”
The solution lies in free market economy and making strong independent regulatory authorities to monitor such issues. Currently, the regulatory authorities in Pakistan are not strong and independent.
”If Pakistan believes in free market economy, it should set up transparent and independent regulatory authorities.” Malhi points out that there is no agriculture policy for Pakistan and nobody looks at farmers’ problems or consumers’ benefits.
One recent example of politics of sugar mafia was obvious when Punjab Chief Minister, Shahbaz Sharif’s son, Salman Shahbaz Sharif, alleged that the Secretary General Pakistan Tehreek-i-Insaf (PTI), Jehangir Tareen, was the head of sugar mafia in Pakistan.

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