By Syed Haroon Haider Gilani
05 September 2009
Since it is now a known fact that the sugar which is being produces at the cost of 36 Rs per kilogram is being sold at the price of 60 to 65 rupees per kilogram in Pakistan. I am here to find out the involved elements in this crisis by identifying the prime beneficiaries of this shortage and price escalation.
Sugar is produced by crushing sugarcane which is grown in the adjoining areas of a sugar mill by the farmers. Sugarcane is sold to the nearby sugar mill upon the maturity of the crop and mills start crushing season in October which lasts in end of March. In 2008 – 09 crushing season, Government of Sindh has fixed the support price of sugarcane at Rs. 81 per 40 kg while the Punjab government fixed at Rs. 83 per 40 kg. According to the information gathered from the sugarcane growers, the mills started buying sugar at the price of Rs. 81 per 40 kg which improved in December at Rs. 90 per 40 kg. The price later improved significantly reaching as high as Rs. 130 per 40 kg because of lower cultivation of sugarcane and lower availability of sugarcane for crushing. About 25 percent of sugar mills in Sindh which are 28 – 29 in total, has announced early closure of crushing season due to unavailability of sugarcane.
The lower production of sugarcane has given the sugar mills a vital reason to create further shortage of the commodity in the country and the mills have practiced their usual hoarding tactics which State bank of Pakistan pointed by warning the sugar mills. State Bank’s warning was denied by PAKISTAN SUGAR MILLS ASSOCIATION giving the reasons”
“Because of economic recession, during the past six months, average consumption of sugar has come down to 307,853 tons, compared with usual consumption of 350,000 tons. This reduction of 40,000 tons in sugar consumption cannot be termed as hoarding,” said Iskandar Khan, Chairman, PSMA, in a letter to the State Bank of Pakistan (SBP).
[ Business Recorder – Monday, May 04, 2009 ]
Not only the mills denied the horading of sugar but later in June 2009, Pakistan Sugar Mills Association was saying”
Pakistan may not need to import more sugar this year after a sharp fall in consumption, traders said on Tuesday, days after the government cancelled a tender to import 50,000 tonnes of sweetener. Sugar traders and industry officials had earlier projected shortages to be in the range of 600,000-700,000 tonnes in the last quarter of 2009, after an expected fall in the 2008/09 crop.
[ Business Recorder – Wednesday, June 03, 2009 ]
It is not obvious that sugar mill owners were playing at their best to create the shortage of sugar in the country by showing the availability of sufficient stocks and discouraging every measure and proposal to avoid the current sugar crisis which especially is in its worst condition during the month of Ramazan. Besides claims of sugar mills, others have been drawing the picture in reverse order and the increase in consumption of sugar was being forecasted by the experts due to increased population. The consumption is sugar is estimated around 4.2 million tons against the domestically produced sugar of 3.5 million tones by 72 sugar mills in the country.
Government was very clear about the upcoming shortage of sugar during the month of Ramazan but the necessary measures to control the situation by importing sugar and checking the hoarding of sugar was not taken which leave a question mark over the Federal Government especially because almost every sugar mill’s board have a member in National Assembly. According to the sources 26 out of 72 sugar mills are owned by the politician of ruling and oppositions parties. Some claims raise the number of mils owned by the policticians as about 50 % of sugar mills are owned by the politicians and current government of Punjab is blaming the federal government for supporting the sugar barons for creating the shortage and crisis of sugar in Pakistan.
Now let us have a look over the politicians owning the sugar mills in Pakistan. Above all the president of Pakistan Mr. Asif Ali Zardari of ruling Pakistan People’s Party is one of the most prominent sugar mill owners who have reasonable stake in various sugar mills including Sakrand Sugar Mills Nawabshah, Ansari Sugar Mills Hyderabad, Mirza Sugar Mills Badin, Pangrio Sugar Mills Thatta, Bachani Sugar Mills Sanghar and Kiran Sugar Mills, Sukkur. Ashraf Sugar mills is owned by PPP leader and incumbent ZTBL President Ch Zaka Ashraf and current minister Mr. Raja Pervaiz Ashraf. Other prominent leaders are Mr. Zulfiqar Mirza and Fehmeeda Mirza who are owners of Mirza Sugar Mills hence Asif Zardari and the Pakistan Peoples’ Party (PPP) have six sugar mills, according to the media investigations. Most of the sugar mills of the PPP leadership were owned by Asif Ali Zardari, mainly in Sindh where the total number of sugar mills stood at 28.
The Pakistan Muslim League (Nawaz) (PML-N) is the single largest party in terms of owning the sugar industry, mainly in Punjab where 11 leaders/members of the party are producing sugar. The Nawaz family tops the list of owners, as it owns nine sugar mills, according to the official. The mills owned by Nawaz family are Abdullah Sugar Mills, Brother Sugar Mills, Channar Sugar Mills, Chaudhry Sugar Mills, Haseeb Waqas Sugar Mills, Ittefaq Sugar Mills, Kashmir Sugar Mills, Ramzan Sugar Mills and Yousaf Sugar Mills. Kamalia Sugar Mills and Layyah Sugar Mills are the two other units owned by PML (N) leaders.
The PML (Q) and its leaders are running nine sugar mills. The Chaudhry family owns four sugar mills, Jahangir Khan Tareen, former Federal Minister of Industries and Production owns two, Haroon Khan, brother of Humayun Akhtar, former Minister of Commerce, and MNA Nasrullah Dareshak and Anwar Cheema own one each in the Punjab. The total number of such mills comes to 20 out of a total 41 sugar mills in Punjab. Former minister Abbas Sarfaraz was the owner of five out of six sugar mills in the NWFP. Mr. Humayoon Akhtar Khan owner of Tandlianwala Sugar Mills Limited (TSML) is among the nine sugar mills owned by PML (Q) leaders are Chaudhry Pervaiz Elahi’s CSK Phalia Sugar Mills, Dareshak’s Indus Sugar Mills, Jahangir Khan Tareen’s JDW Sugar Mills and United Sugar Mills, Anwar Cheema’s National Sugar Mills, Chaudhry family’s Pahrianwali Sugar Mills, Chaudhary Shujaat’s Punjab Sugar Mills. Pattoki sugar mills, owned by Mian Mohammad Azhar, is also included in the list of mills owned by the PML (Q).
The sugar mills either owned by the ruling, opposition and business circles are united under the umbrella of the Pakistan Sugar Mills Association (PSMA), which has the strength of around 75 mills.
Dadu, Kiran, Thatta and Bachani are the four mills that are not members of the PSMA. The PSMA, according to the official, always takes unanimous decisions on sugarcane crushing, release of sugar in the market and other things. Due to monopoly attained by the PSMA, the Monopoly Control Authority had taken action against millers. However, it had failed to do any thing real to break the PSMA monopoly.