News

New mills and enhanced capacities: Sugar mafia looting country by bulldozing laws

April 18, 2020 12:49 AM


This is with reference to a recent Dawn News program hosted by Mehar Abbasi. In this program, Chaudhry Waheed of Hunza Sugar Mills Ltd participated as a spokesperson of Pakistan Sugar Mills Association. Other participants of the program included news anchorpersons Muhammad Malik and Kashif Abbasi. In reply to a question by Muhammad Malik, Chaudhry Waheed openly admitted about increasing the crushing capacity of his sugar mill. This open admission by the PSMA spokesperson of illegally increasing the capacity of his mill puts a big question mark on the working of the sugar industry.

It is highly illogical that existing sugar mills are constantly increasing their crushing capacities illegally whereas the setting up of a new sugar mill is not allowed as per the prevalent/applicable law. This scenario truly indicates the monopolistic position which the sugar industry is enjoying since long as no new entrant is being allowed to enter the field. This illegal enhancement of crushing capacities by sugar mills is in blatant violation of the Government of Punjab Industries Department notification of 6th December 2006 according to which no new sugar mill can be established and no enlargement is allowed in the province of Punjab. The commission set up by the Government of Pakistan to investigate the affairs of the sugar industry should also look into the monopolistic working of this industry and illegal enhancement of crushing capacities by the sugar mills' owners.

In spite of the above-mentioned notification of the Government of Punjab, some influential members of the sugar mafia have illegally managed to establish two new sugar mills: one being RYK Sugar Mills set up in 2007 and the other one Al-Moiz Sugar Mills at Piplan in District Mianwali established in 2014. These two mills which were illegally set up are operational even to date ever since their establishment. It is highly discriminatory that no new entrant is being allowed in the industry where existing sugar mills or the so-called sugar mafia either illegally enhance their capacities or even establish new mills by using their influence. This mafia does not allow new entrants or ordinary businessmen to enter the field under the pretext of the above-mentioned notification. That is why only the political elite has exclusive control over this industry/sector. Hence, like other businesses/industries which are open to all, the government should allow a level playing field in the sugar industry to everyone by removing the ban on the establishment of new sugar mills. New entrants must be freely allowed in the sugar industry as well on the basis of demand and supply and free-market competition. The sugar mafia/cartel at present is actually operating in sheer violation of the principle of free/open market competition.

The pricing of raw materials all over the world is based on their quality. On the other hand, the government in Pakistan fixes the support price of sugarcane and it is sold on the fixed price irrespective of its quality or recovery in terms of sugar production. Logically, the sugarcane support price should be linked with its recovery i.e. low recovery cane should be priced low as compared to the cane with higher recovery. For example, in the Southern Punjab where Mr Jehangir Tareen's sugar mills are based, the recovery is 11% whereas in Central Punjab it ranges between 9% to 9.5%. This, in simple terms, means that the mills in Southern Punjab enjoy 20% more productivity but pay the same price for sugarcane on which the mills in Central Punjab do their purchasing. That is why the mills in Central Punjab are either being closed or sold on account of the losses they have to suffer whereas in Southern Punjab every mill is increasing its capacity to the maximum possible level. The mill owners in the Southern Punjab area do not allow even a single new entrant and are actually enjoying their monopolistic position to their maximum advantage.

Furthermore, the sale of sugar by the mills is not identifiable and transparent. The ID cards of truck drivers and even lower staff of the mills are used to manipulate the sale process and the sugar industry is not even willing to reveal the actual identity of the persons to whom it sells its end product. The difference between sales tax for registered and non-registered buyers was removed in the finance bill of 2019. The rationale behind this policy was to register everyone on account of sales tax as well as to make the sale process transparent and well-documented. But to this day, the sugar industry is not disclosing the actual buyers of its end product.

In view of the above, it is highly preferable and logical that new entrants and players be allowed to enter the sugar industry to provide a level-playing field to all instead of existing sugar mills increasing their capacities against the law. The entry of new sugar mills will remove the current monopolistic situation in the industry. The free and barrier-less entry of new players will also enable the industry to operate in a more transparent, vibrant and competitive environment. To enter into any business/industry is a fundamental right of everyone which must be secured by all means by the state/government.

The writer is a freelance columnist and blogger

https://www.youtube.com/watch?v=pOavNaBX4NU


Most Read

  1. Farmers can apply for Bardana through App from Saturday as Punjab starts wheat procurement campaign Farmers can apply for Bardana through App from Saturday as Punjab starts wheat procurement campaign
  2. 16 die, 30 wounded as truck carrying 100 pilgrims fall into ditch near Hub 16 die, 30 wounded as truck carrying 100 pilgrims fall into ditch near Hub
  3. Ayeza Khan has ideal stylist squad! Ayeza Khan has ideal stylist squad!
  4. French athlete breaks world record after climbing Eiffel Tower French athlete breaks world record after climbing Eiffel Tower
  5. Punjab students asked to get registered for getting petrol, e-bikes Punjab students asked to get registered for getting petrol, e-bikes
  6. Star woman cricketer Aliya Riaz ties the knot with Ali Younis in intimate Nikkah Ceremony Star woman cricketer Aliya Riaz ties the knot with Ali Younis in intimate Nikkah Ceremony

Opinion

  1. Insights into the Pakistan Stock Exchange's Recent Record High Triumph
    Insights into the Pakistan Stock Exchange's Recent Record High Triumph

    By Zulfiqar Ali Mir

  2. IMEC to sabotage CPEC
    IMEC to sabotage CPEC

    By Dr Asif Channer

  3. 1947 TO FORM 47
    1947 TO FORM 47

    By Dr Asif Channer

  4. Beijing wants to further highlight industrial sector in its country and take scientific innovation to new heights....
    Beijing wants to further highlight industrial sector in its country and take scientific innovation to new heights....

    By Ali Ramay

  5. Global race: China will reduce its unnecessary expenses
    Global race: China will reduce its unnecessary expenses

    By Ali Ramay

  6. Channer Pir: The Great Saint of Cholistan
    Channer Pir: The Great Saint of Cholistan

    By Dr Asif Channer