News Analysis |
The government has failed to impose a sugarcane grower-friendly decision of the previous Pakistan Peoples Party (PPP) administration about printing sugarcane purchase quantity and price, apparently under the pressure from influential sugar millers, which include various federal and provincial lawmakers.
In the current spectrum, poor sugarcane growers have been left at the mercy of the millers, many of whom are paying far lower than the set support price for sugarcane. The PPP government, in its 2008-13 tenure, had agreed on printing the quantity and price of sugarcane on the purchase receipt in a bid to avoid exploitation of the farmers.
It was also agreed that provincial cane commissioners would ensure the inclusion of sugarcane purchase quantity and price in the receipt. In case of any problems, they would seek assistance of the district coordination officers (DCOs).
The devised mechanism was also accepted by different ministries and organizations including the Ministry of Finance, Ministry of National Food Security and Research, Federal Board of Revenue, State Bank of Pakistan, cane commissioners of Punjab, Khyber-Pakhtunkhwa and Sindh, and the Kisan Board.
However, according to sources, the sugar millers are now paying for less than the actual weight of sugarcane and are also offering Rs. 140 per 40 kg of sugarcane, which was much lower than the support price of Rs. 180 set by the provincial governments.
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The policy adopted by the current government seems to have been more favourable for the millers in comparison to the farmers. It has doled out billions of rupees in export subsidy to the millers. The Economic Coordination Committee (ECC) of the cabinet, in its meeting held in December last year, approved a minimum benefit of Rs. 15 billion for the millers through procurement of 300,000 tons of surplus sugar stock.
The total blow to the national treasure, both for the federal and provincial governments, would be at least Rs. 20.4 billion including the allocations for subsidy on sugar exports. This was in addition to the benefit of Rs. 30 billion that the millers would get by claiming Rs. 20-per-kg subsidy on the export of 1.5 million tons.
Apart from this, the sugar mills would ensure that funds were available in their accounts every time they issue a cheque. The bank would disburse the amount as per details of the cheque and subject to the availability of funds in a sugar miller’s account.
Sugar exports have increased by nearly 6 times for the period July to November FY18 when compared to the same period last year, as per the latest State Bank of Pakistan data. Given the change in the situation, from a ban on sugar export last year to an export subsidy this year, the rise in exports does not come as a surprise.
With Pakistan’s current account deficit, rise in exports are generally met with cheers; but in this case there are few winners besides the influential sugar millers. And even then the sugar millers clamour about their woes that include the notified rate being not viable, export subsidy payments not received as yet, and the federal excise duty of Rs. 6 per kg being unfairly high.
Read more: Sindh sugar mill owners fail to settle crisis even after SHC…
Additional to these problems are the problems faced by the textile sector. Incentivized sugarcane cultivation elbows out cotton production, which is an essential for Pakistan’s key industry of textiles.
However, since medium and small sized sugar growers are forced to sell their produced through middlemen at prices lower than the notified rate of Rs. 182 per 40 kg in Sindh and Rs. 180 per 40 kg in Punjab, they do not appear to be better off by preferring sugarcane to other cash crops. While the mill owners and cane growers are at loggerheads about the sugar cane price, the provincial and federal governments seem to be playing a blame game of their own.
Later in July 2012, it was recommended that the sugar mills should pay sugarcane growers through a cheque with an attached cane purchase receipt showing the purchase price and quantity.
The federal government considers it the responsibility of the provincial government to ensure that the farmers get the fixed price, while the provincial government has blamed the federal government for creating the crisis in the first place. Last month, protests were staged by growers in various parts of the country including national highway Karachi and areas of Southern and Central Punjab; apparently to no avail.
During discussions in an ECC huddle in January last year, Minister of State for Information Technology Anusha Rahman had referred to minutes of the Sugar Advisory Board meeting held on December 19th, 2016. The board was informed that sugar prices had been consistently increased over the years despite virtually no change in sugarcane rates for the past three years.
Read more: Sugarcane farmers call off protest after Shehbaz assurance
During the PPP government’s tenure, the federal cabinet in February 2012 had come to the decision that in order to ensure timely payments to the growers, the adviser to prime minister on legal affairs along with secretaries of finance and industries would examine the feasibility of converting the sugarcane purchase receipts into cheques in consultation with the growers.
Additional to these problems are the problems faced by the textile sector. Incentivized sugarcane cultivation elbows out cotton production, which is an essential for Pakistan’s key industry of textiles.
Later in July 2012, it was recommended that the sugar mills should pay sugarcane growers through a cheque with an attached cane purchase receipt showing the purchase price and quantity.
It was also agreed that provincial cane commissioners would ensure the inclusion of sugarcane purchase quantity and price in the receipt. In case of any problems, they would seek assistance of the district coordination officers (DCOs).
Read more: Sugarcane protests cause massive disruption in fruit exports
The Pakistan Banks Association also backed the plan, saying under the mechanism where purchase receipts would be backed by cheques, the growers would have the option of recourse to legal action. Apart from this, the sugar mills would ensure that funds were available in their accounts every time they issue a cheque. The bank would disburse the amount as per details of the cheque and subject to the availability of funds in a sugar miller’s account.