KARACHI, April 29: All along the current sugarcane crushing season, from November 2004 to April 2005, millers have been fighting on three fronts — cane growers, the government and consumers. The fighting continues as the Economic Coordination Committee (ECC) of the cabinet in its Tuesday’s meeting took notice of the unusual high prices of sugar, which had touched Rs26 even though there is plenty in the stock. Influential growers, who are said to be entrenched in the federal and provincial governments, have managed to get relatively good price for sugarcane, reportedly at Rs55 to Rs60 a maund in some cases this season. But the government maintained its pressure and imported raw sugar and then allowed duty free import of fine sugar.

But the consumer continues to be at the receiving end. He was forced to buy sugar at Rs21 a kg in last week of December as decided by a cartel of sugar millers. And now it costs Rs26. Market analysts fear sugar prices may go up between Rs32 to Rs35kg by September and October. Since sugarcane crushing starts in November the sugar supply position in September and October would be critical. For the last few years Sha’aban and Ramzan have been falling in September and October when sugar demand increases. It is being tackled by the Trading Corporation of Pakistan (TCP), which releases its stocks in the market during September and October to meet the rising demand.

But this season, the millers tried to pre-empt the government move in the last week of December when crushing was its peak by pushing up the prices from Rs19 a kg to Rs 21 and then to Rs 24.

Sugar is now selling at Rs26 a kg when sugar mills are reported to have produced 2.9 million tons of sugar by April 15. Final sugar productions are expected to be somewhere between 3.3 to 3.4 million tons. Market report suggests that mills have with them at least two million tons of stock which is sufficient to meet the demand for six months. The TCP has 360,000 tons of stock and at least five mills have imported over 0.3 million tons of raw sugar.

Prime Minister Shaukat Aziz came out heavily on the millers while chairing the EEC meeting on Tuesday and blamed the high sugar prices to ‘cartelization of sugar trade’. The high prices of sugar, it was alleged, had no link with the market realities.

A government Adviser on Finance Dr Ashfaq has been asked to give a report to the next ECC meeting. However, the Pakistan Sugar Mills Association has blamed government for importing duty free raw and fine sugar, the sale of TCP sugar through Utility Store Corporation at Rs 23 a kg and the payment of more than the government fixed prices of Rs43 for sugarcane have affected their cash flow. By implication, the millers want consumers to pay for their losses.

Millers are notorious for stopping payment to the growers. In 2003 and then in 2004, they forced the government to instruct the TCP to buy their surplus sugar production. The growers were paid outstanding dues from the sale of surplus sugar.

The TCP has given a very small quantity of 2,500 to 3,000 tons every month to the Utility Stores Corporation which has a network of 276 outlets. The quantity and the outlet network are too small to affect the liquidity of the millers.

In November last year, the government had formed a committee headed by Industries Minister Jehangir Tareento to find out the linkage between the price of the sugarcane and that of sugar. The first meeting of this committee was held on December 3. What happened after that meeting was never reported.

Cartels dominate the Pakistan market, be it of sugar millers, wheat traders and flour millers, cement manufacturers or auto makers. The government has been found wanting in making timely intervention. One of the solutions for the sugar problem is to impound the entire sugar stock of the millers. The government should release it under strict vigilance and monitoring. The millers should be paid after a realistic assessment of production cost with some reasonable profit.