Pakistan Sugar Mills Association (PSMA) has rejected the findings, conclusions and recommendations of the report by the Sugar Inquiry Commission and termed it a premeditated exercise to malign a lawful and tax-paying industry that has an enormous social and economic contribution in Pakistan.
PSMA also strongly objected to the unnecessary publicity being given to the report for extraneous and dubious reasons and ensuing media trial of the entire sugar industry. PSMA blamed the commission for repeating the mistakes of the earlier committee and targeting a whole industry with generalized and unsubstantiated aspersions and allegations.
They attributed it to the same members from initial committee leading the commission again. The report is farcical and deliberately twisting the facts to suit the preconceived conclusions of the commission. All written submissions of the PSMA were completely ignored by the commission, which continued to demonstrate the same basic ignorance as the committee regarding commodity markets in general and sugar sector in specific.
Glaring, elementary and conceptual errors have been committed by the commission, they added.
Expounding further on one of the biggest fallacies in the report, PSMA called the costing exercise carried out by the commission as completely “nonsensical” and fictitious. Even finance costs which constitute almost one third of the cost of the sugar industry after sugar cane payments have been excluded by the commission with no plausible reason or justification. It questioned how can an industry that has to pay for raw material in three months and sell its end product over twelve months work without finance costs?
Furthermore, the commission has shockingly labeled each and every government and private institution in Pakistan as incompetent, unreliable or corrupt in its working. It has questioned the authenticity of business activities that were supervised/regulated by FBR, SECP, cane commissioners, district governments, Industries Department (Punjab), Federal Ministry of Industries, Competition Commission, chartered accounting firms, State Bank of Pakistan and even at times IB, Special Branch and FIA.
Are all the officers of these institutions supervising their relevant activities across Pakistan wrong and unable to catch errors in 82 mills across Pakistan? What image are we giving of our country and will all involved be equally investigated along with sugar mills in the aftermath of the report?
PSMA Chairman Aslam Faruque pointed out that the genuine issues faced by sugar mills were also not given any due consideration. The Provincial Sugar Factories Control Act, 1950 is being applied in a piecemeal and unfair manner, whereby only a minimum support price of sugar cane is notified annually with no cap on price for sugar cane in seasons where there is increased competition for cane. As stated earlier by PSMA, either the fixation of minimum support price of sugar cane under the Provincial Sugar Factories Control Act, 1950 should be discontinued, or a price of sugar commensurate to the minimum support price of cane be also set when announcing the cane support price.
Liquidity problems on account of delayed payment by the Government agencies of energy purchase charges, tax refunds and export subsidies etc. should also be resolved. Instead of recognizing that prevailing issues were actually caused by flawed and defective regulatory policies of the government(s), the commission has in fact recommended even more impractical and unrealistic regulatory proposals which are unprecedented for any business sector and, if implemented, will bring the sugar industry to a stand-still.
The PSMA strongly refuted the allegations of widespread mistreatment of growers and questioned why and how, if the growers were not being paid their dues fully and on time, sugar cane cultivation continued to grow year on years in the country for so many years. Furthermore, the increased yearly production of sugar was greatly enhanced by increasing grower productivity which was directly attributable to the hard work of the farmers and the technical and financial cooperation and assistance of the sugar mills with them.
Aslam Faruque questioned the entire premise of the exercise that was carried out, saying that there was never any shortage of sugar. “Before the export policy of the PTI government, sugar mills were going out of business and sugarcane growers were in desperate straits. This government should take the credit that it has brought balance back to the sugarcane economy with exports.
An investment of Rs 3 billion by the Punjab government to facilitate exports not only earned approximately Rs 50 billion foreign exchange for the country in a time of desperate need but also the farmers got roughly Rs.60 Billion more than the minimum support price from the sugar mills in 2019-20 season. Finally, the chairman said that these were only initial remarks and promised that the association would share a more detailed response about the contents of the report in due course.
