The minister of energy has proposed that the government should remove the duty on sugar import to curb manipulation of the sweetener’s prices in the country.
During discussion at a cabinet meeting last week, Energy Minister Hammad Azhar, who was also the former minister of industries and production, spoke about deregulation of the sugar industry and a cartel allegedly formed by the manufacturers.
He pointed out that the minimum support price of sugarcane, announced by the government, was only indicative and sugar mills usually purchased the sugarcane from farmers at prices higher than the minimum rate.
He stressed that regulation of the sector caused distortion, adding that the government should let market forces determine prices of sugarcane and sugar.
Speaking at the meeting, the cabinet secretary emphasised that the recommendation for abolishing crop zones was in contravention of an earlier decision of the cabinet, under which the National Food Security and Research Division was directed to carry out a scientific study on the zoning requirements while focusing on the crop patterns to be adopted in various zones to boost agricultural productivity.
The secretary pointed out that it had also been recommended to allow free choice in the selection of area by the private sector for setting up sugar mills through the abolition of Sugar Factories Establishment and Enlargement Act, 1966.
“This may lead to the unregulated proliferation of sugar mills and, in turn, may negatively impact the area being planted with cotton and wheat crops,” the secretary said.
“This aspect needs to be seen in light of Pakistan’s textile exports to the tune of $16 billion and substantial wheat imports over the last two years.”
The energy minister clarified that the thrust of the recommendation was to promote competition by allowing new sugar mills within the existing declared areas and not to completely abolish the zoning system.
The cabinet noted that the recommendations needed further deliberation so they should be released for public debate and subsequent improvement.
The Industries and Production Division said that the minister of industries could negotiate with Pakistan Sugar Mills Association (PSMA) for a reduction in prices in light of findings of an inquiry commission.
For long-term stability in sugar prices, a committee should be constituted under the minister of industries and production for reviewing the existing sugar policy and the cost of production mechanism, it said.
In compliance with the cabinet’s decision, a committee was formed which comprised the minister of national food security and research, adviser to prime minister on institutional reforms and austerity as well as other members.
Recommendations of the sugar sector reform committee, headed by the minister of industries and production, were placed in a summary for approval of the cabinet.
The committee had held seven meetings and its recommendations were compiled in a report.
Published in The Express Tribune, December 22nd, 2021.
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