The politics of sugar

What was an open secret in the sugar industry is now coming to pass: the sugarcane crop has shrunk this year, driving up the price of the primary input of refined sugar and leading to a fresh spike in the price of sugar across the country.

So alarming is the situation that credible reports indicate sugarcane growers are demanding up to Rs230 per 40 kg for their crop, as opposed to the official rate of approximately Rs100. Pleading helplessness, sugar millers are jacking up the price of sugar they refine so that by the time sugar reaches the end consumer after passing through the hands of various middlemen and ‘investors,’ it is costing up to Rs80 per kg in parts of the country. Adding to this picture of misery, the delay in the import of sugar has meant that sugar may now have to be imported at approximately Rs65 per kg, which is likely to be the baseline figure for the price of sugar in the year ahead. How have things got so bad? Despite the fierce attention paid by the media to the sugar crisis and the Supreme Court’s intervention, the fact is the sugar supply chain is rife with manipulation and unethical, and possibly illegal, behaviour — and until those underlying problems are addressed, consumers will always get a raw deal.

Start with sugarcane, the basic input of sugar. It is a crop thoroughly infused with politics and the subject of an almighty tussle between growers and millers. Small growers are completely marginalised and utterly powerless in this game, but the large growers and middlemen do extract their pound of flesh from the millers. Next, millers are up to mischief at the output end by colluding to fix the price of sugar — a reality finally being probed into by the CCP. On Jan 1, the CCP issued show-cause notices to three sugar mills after earlier only issuing a notice to the Pakistan Sugar Mills Association. We hope the process will lead to the exposure of all corrupt practices and result in the punishment of the guilty. For too long fat-cat sugar millers with political connections of the highest order have feigned innocence and claimed they are ‘managing’ the interests of all sides, including the consumer.

Then there is governmental inefficiency, collusion and negligence. The domestic and worldwide sugar-production outlook is reasonably well known. If sugar has to be imported, which at present it must, then why does the government rarely seem to get a good deal for consumers? The purpose of regulation and state intervention is to ensure that the interests of the weak (usually consumers) are protected — something few would argue the government is doing well at the moment.

source: dawn