LHC stay orders causing ‘surge’ in sugar prices

LAHORE:

In a confidential report submitted to the Punjab government, it has been exposed that the skyrocketing sugar prices are a direct result of the stay orders issued by the Lahore High Court (LHC).

The report, obtained by The Express Tribune, revealed that the LHC's judicial injunctions paved the way for an alarming increase in the cost of sugar.

According to the report, the injunctions issued by Justice Shahid Karim and Justice Anwar Hussain of the LHC on May 4, 2023, and Aug 1, 2023, allowed for inflation and profiteering by sugar mills, brokers, and speculators.

The report raised questions about the responsibility of price escalation and noted that most cases related to sugar mills had been decided in favour of the mills and against the general public and farmers in the court of Justice Shahid Karim, prompting concerns about a potential nexus between mills and brokers.

It stated that the sugar prices were being inflated artificially, allowing mills, brokers, and speculators to make exorbitant profits.

Read more: Sugar prices up by a staggering 59%

During the current crushing season, the country produced a total of 7.730 million metric tons of sugar, of which 5.032 million metric tons were stocked in Punjab alone, which historically caters to the region comprising Punjab, ICT, and partially K-P, AJK, and G-B.

It highlighted the disparity between supply and demand with ample sugar stocks in Punjab that should had sufficed to meet the needs of the integrated region.

It revealed that on April 20, 2023, the Ministry of National Food Security and Research (MNFSR) announced an ex-mill price of Rs96.08 per kilo and a retail price of Rs99.33 per kg for Punjab.

However, this notification was suspended by LHC's Justice Shahid Karim on May 4, saying that price fixation was a provincial matter.

The next hearing would be on Sept 20.

The report highlighted that taking advantage of this judgment, the food department submitted a summary to the cabinet, which eventually led to the delegation of sugar price fixing powers to the Punjab cane commissioner through the Punjab Foodstuffs (Sugar) Order, 2023.

Despite this, another judge, Justice Anwar Hussain of LHC, issued a stay order against price fixation on Aug 1, 2023.

The case was heard on Tuesday.

The report goes on to outline the reasons for the significant price escalation, mainly being the stay orders and the charging of an excessive price of Rs180 per kg by sugar mills and speculators, compared to the notified retail price of around Rs100 per kg.

Since the stay order on May 4, 2023, approximately 1.4 million metric tons of sugar had been sold by mills at an average of an additional Rs40 per kg.

This resulted in extortion of around Rs55-56 billion solely because of the stay orders.

Further, Justice Karim also issued a stay order against monitoring the supply chain of sugar, leading to the unchecked movement of the commodity and its smuggling to Afghanistan through Balochistan.

Approximately 700,000 MT of sugar had already been smuggled, depleting strategic reserves and leaving the country vulnerable to shortages in the upcoming year.

It noted that most cases related to sugar mills had been decided in favour of the mills and against the general public and farmers in the court of Justice Karim.

"It is intriguing to note that all the cases of the sugar mills go to the court of Justice Shahid Karim and almost all the cases- and they are in dozens - have been decided in favour of the sugar mills and against the general public and the farmers."

It said that the nexus of sugar millers and the brokers – each mill had five to six brokers who further sold sugar to dealers in the country – was responsible for price escalation.

“Pakistan had enough of sugar this year. Due to higher international prices, the sugar millers started smuggling to Afghanistan. Sugar price is escalated by the brokers through various WhatsApp groups.”

The sugar changed hands while lying in the mills and its price was skyrocketing like anything.

Each new buyer added up from Rs5 to Rs20 per kg. The process was supported by the sugar mills as their sugar too got costlier without spending even a single penny, the report added.

The situation was worsening day by day, with the fear that sugar prices would continue to rise.

The report suggested that urgent measures were needed to address this crisis, including vacating the stay orders at the earliest, detaining speculators and brokers who had manipulated the sugar market, and conducting thorough investigations into sugar speculation rackets.

Failure to take immediate action threatened to plunge the country and the province further into crisis.

“The stay orders need to be vacated at the earliest otherwise the country and the province will plunge further deeper into crisis. Without notified price, the Food Dept and Dist Admin cannot check hoarding or control prices.”

The report concluded by pointing out that the responsibility for the price escalation lied with the courts and the nexus between sugar millers and brokers.

It called for the immediate vacation of the stay orders, recommending detaining speculators and brokers under the Maintenance of Public Order (MPO).

If action was not taken swiftly, the nation and the Punjab province would face further crisis as the price of sugar continued to rise.

The government must intervene urgently to control hoarding and stabilise prices.

Additionally, the intelligence agencies should be mobilised to uncover speculators and brokers involved in this racket.

The situation called for decisive measures to prevent a deeper crisis and mitigate the impact on consumers and farmers.