Sugar price control mechanisms missing implementation

Mill owners and government are in a tussle over who cooperates and who does not

LAHORE:

In the midst of every inflationary spell sugar prices are often the highest risers but even when inflation is curtailed sugar remains every successive government’s Achilles heel.

Governments past and present in the country’s most populous province have adopted various strategies over the years to control the sugar supply but have always struggled when it comes to implementation. Recently, during the Pakistan Tehreek-e-Insaf’s tenure in Punjab, the Punjab Information Technology Board came up with a software to track sugar production’s supply chain from the mills to the market. The software would enable all the mills to give their update daily on production and supply.

However, as per sources privy to the matter, the software like other measures in the past could not be implemented. Punjab’s Cane Commissioner, Muhammad Zaman Wattoo, informed The Express Tribune that under the Punjab Sugar (Supply Chain Management) Order, 2021 and the Sugar Factories (Control) Act 1950, sugar mills are bound to provide details of sugar sold to the dealers.

“This information is necessary to track the supply chain and to ensure that sugar is not hoarded. However, despite repeated requests by the Cane Commissioner’s office no one has bothered to provide the details.” A big factor in stabilising sugar prices is the crackdown on hoarding but even after repeated warnings from Wattoo’s office that hoarded sugar will be confiscated, mill owners have not batted an eye. Wattoo believes that this blatant disregard for the law further encourages other hoarders to stockpile on sugar and contribute to the artificial jacking up of prices.

Wattoo’s assessment holds weight as despite mill owners previously fixing a price of Rs 76.50 per kilogram (kg) after the conclusion of the crushing season in March, they have now conveniently increased it to Rs 80.50 per kg. However, Chaudhry Zaka Ashraf, Chairman of the Pakistan Sugar Mills Association, disagrees with Wattoo, stating that it was actually the government that does not help sugar mills. “If we had not complied with the government departments wishes then how has sugar production surpassed 5 million tonnes this year? Our production has far exceeded the country’s consumption but instead of helping us export sugar the government has banned it.” Ashraf was of the view that since the government was in need of foreign reserves, it should allow export of surplus sugar as it would generate 1 billion dollars.

“We can help in stabilising sugar prices and generating much needed foreign reserves. However, the government departments have to work with us,” Ashraf told The Express Tribune.

Rising trend in the sugar price has been observed during the last few days. This price hike is baffling as the crushing season was concluded in the last week of March and the ex-mill price, previously fixed by the sugar mills at around Rs 76.50 per kg, had accounted for the cost of production. Increase in ex-price of sugar to Rs. 80.50 per kg two months after the sugarcane crushing concluded, is sheer profiteering on the part of sugar mills.

Under the Punjab Sugar (Supply-chain Management) Order, 2021 and the Sugar Factories (Control) Act 1950, the sugar mills are bound to provide details of sugar sold to the dealers. This information is necessary to track the supply chain and to ensure that sugar is not hoarded. The sugar mills, despite repeated requests by Cane Commissioner’s office , haven’t provided the details. This non-provision of details of sale of sugar is encouraging the hoarders to hoard sugar abd jack up prices artificially. The sugar mills are once again directed to provide the details so that hoarding is curbed and sugar price is stabilised.

The stockist and hoarders are warned against hoarding. They are warned that hoarded sugar will be confiscated.

Published in The Express Tribune, June 15^th, 2022.