THE sugar crisis is an unwelcome example of how poor governance can directly hurt the people.
As the politicians have squabbled, the courts intervened and the growers, millers, middlemen and retailers argued, the price of sugar has remained stubbornly high. Now the federal government has set up a commission that, in the words of Finance Minister Shaukat Tarin, will ‘develop a formula for resolving the sugar crisis forever’. A very ambitious goal. Start with the immediate problem: the Lahore High Court has ordered the Punjab government to ensure the supply of sugar at Rs40 per kg in the province. If implemented, the Punjab government is worried that sugar will be trucked out of the province to service markets in other provinces and perhaps even neighbouring countries where the price of sugar is higher. Hence the Punjab government’s demand for a ‘uniform’ sugar price across the country. An apparently reasonably demand, but one that raises the next question: how is the price of sugar determined in the first place? Eighty per cent of the price of sugar (minus taxes) sold by mills is determined by the price of sugarcane. Therein lies the next flaw: cane is priced by the provinces and differential prices at that level make a ‘uniform’ national price for sugar difficult.
Turn next to the growers and millers. Growers have a cartel of their own while some have switched to more lucrative rice. Millers are accused of their own manipulations: calculating the price of cane on weight rather than sucrose content; delaying payments to growers, etc. Amidst all of this there is no forum for the protection of consumers, so, for example, when the international price of sugar is low suppliers urge the government to impose duties on sugar to prevent its import, while when the price is high in the international market suppliers raise domestic prices on that pretext. Can the government-appointed commission fix all that ails the sugar industry? We shall have to wait and see.
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