THE crisis that afflicts the sugar industry is symptomatic of the ills that afflict our country. Every political government is required to be business friendly, because revenues generated through tax collection and exports are vital for any state to function and deliver to citizens their basic needs and investment in human resource development, state security, justice and law enforcement. However, the problem occurs when a government becomes hostage to conflicts of interest of big business cartels, promoting undocumented black economy and institutionalized tax evasion. This situation becomes more precarious when paid or elected public office holders themselves are involved in such cartels. A state becomes dysfunctional when revenue generations are lesser than expenditure and the deficit has to be bridged with foreign loans. The ostentatious lifestyles of paid or elected public office holders, unwilling to adopt austerity, further adds to woes, and budget deficit keeps on escalating, which finally lands a country in an economic quagmire such as Pakistan faces.
The escalation in prices of sugar has been persistent, but it has peaked its highest in the country. If we are to consider the government declared production estimates, compiled by provincial food departments and other relevant departments of the state, around eight million tons of sugar was produced by approximately 90 sugar mills. In 2021/2022 the total sugar produced was 8.6MT, which because of flood damage reduced to 7.2MT. Based on per capita annual consumption of 22 kgs of refined sugar, as compared to 15Kgs in India, the annual estimated sugar consumption is 6.1MT. Sugar contributes about 0.6% to GDP and constitutes 2.9% of the total value of agriculture produced in Pakistan. Every government, including PTI and PDM during their tenure has approved export of refined sugar based on surplus estimates. In June 2023 the ECC of the cabinet, on directive of Sindh High Court, in a meeting chaired by FM Dar with Commerce Minister Naveed Qamar, Minister of State Musadik Malik, SAPM Tariq Bajwa, Coordinator Economy Bilal Azhar Kiyani, federal secretaries etc., approved export of 32,200 MT within 60 days from 12 June.
This raises questions whether the Judiciary should be involved in such matters? Coming back to sugar cane, one of key byproducts using existing technology with slight adjustments is production of sugarcane alcohol. Production of Ethanol from sugarcane can help reduce import of petroleum as a source of energy. Approximately, 1MT of sugar can produce 100 million liters of Ethanol, which can be used as a green energy source with net zero carbon emissions. It can be blended with gasoline for use in transportation. In June 2022, India achieved an average blending of 10% ethanol in petrol, and by 2030 plans to achieve 20%. The use of E20, a blend of 20% ethanol with 80% gasoline leads to reduction 0f 50% carbon monoxide emissions in two wheelers and 30% in four wheelers. India plans to achieve a net saving of $3.6bn on its import bill. An acre of sugarcane produces twice as much ethanol than an acre of corn.
In the 80s, electricity shortage caused temporary closure of many textile mills, most of them producing yarn, and the farmers growing cotton suffered losses. It must be noted that cotton was the largest cash crop of Pakistan, producing enough to meet domestic demands and export surplus. Cotton harvesting consumes far less water than sugar cane. This forced farmers to switch over to sugarcane. As usual, the state oblivious to the long-term impact on textile industry, which was and is the largest export revenue generation industry in Pakistan, turned a blind eye and today Pakistan, which was a major cotton producer in the region, imports it to keep its textile mills running. This is what happens, when the bureaucracy entrusted with the task of policy decisions is not qualified in relevant field, and generalists, or jacks of all trades, are at helm. The total acreage where sugarcane is grown has increased in Pakistan because of the clout of the sugar cartel and their hold in corridors of power, both within the political elite and establishment. Pakistan today is the 9th largest sugar producer and 6th big sugar cane producer in the world.
If the basic principle of Supply and Demand is to be taken into consideration, even after the flood damage, refined sugar produced in the country exceeds by 1.1MT, the total consumption in the country. Either these statistics given by the various departments of the state are fabricated, with an ulterior motive, or else in case these are authentic, then either it is being smuggled, or hoarded. There is no rocket science involved in this. In either case, it is the state and those that have been at helm in corridors of power for the past few decades, who are responsible for this criminal negligence. The irony is that whilst refined sugar prices have escalated over the years, the sugarcane support price given to farmers has not increased proportionately, although the prices of fertilizer etc., has increased. According to the UN Comrade database, Pakistan’s export of sugar and sugar confectionery in 2021 was US$153.12M as compared to $23.749M in 2019. In 2023 the PDM Coalition government again recommended export of an estimated 0.32MT. Based on political rivalries, every political party in opposition has blamed the ruling party of creating an artificial shortage because of its flawed decision to export surplus.
The quantum of sugar exported is just a fraction of the estimated surplus stocks compiled by the state. The sugar barons can, or could be involved in hoarding but they alone cannot be blamed for smuggling on the scale that it has been taking place for decades. However, none in government, or within the departments of state, created to regulate all these, have ever questioned where the estimated surplus has disappeared. Everyone in Pakistan is aware that almost one million tons of sugar is smuggled across our western borders every year, on trucks and containers plying on roads in areas which are supposed to be under surveillance and yet manage to pass through various border check-posts and along the coast line.
—The writer is contributing columnist, based in Lahore.
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