LAHORE: The sugar sector is currently at a major turning point as it set to transform towards deregulation amid a cautious case for balancing between industry growth and farmer security.
The potential change highlights the optimistic outlook of the industry and the deep-rooted concerns over what it could mean for farmers. Zaka Ashraf, chairperson of the Pakistan Sugar Mills Association (PSMA), believes that removing government control is necessary for long-term stability and creating a win-win situation for all. He suggests that the industry is ready to move away from state controls and towards a free-market model.
However, Khalid Khokhar, chairperson of Pakistan Kissan Itehad (PKI), views this transformation with caution. He states that while the industry seeks efficiency, the farming community will face challenges. However, he expressed the fear of being left unprotected. Farmers are concerned over the challenge of global price competition and unfair domestic cost of production coupled with ‘unjustified deductions’ by the industry that might occur without third-party oversight, he observed.
Both stakeholders of the sugar sector expressed their opinions while talking to The News in the backdrop of the federal government’s accelerated push to implement another condition of the International Monetary Fund (IMF) through the approval of sugar deregulation policy. The draft policy is said to have been put forward for the federal cabinet’s nod.
The main part of the deregulation argument, according to Zaka Ashraf, is the need to pitch the local sugar industry for meeting international market trends. This alignment would help manage extra stocks through exports, fetching foreign exchange while ensuring the industry’s global competitiveness.
Ashraf claims that a deregulated market would allow the industry to make quick business decisions based on real-time data. Currently, the system is slow due to the many levels of government approvals required for everything from pricing to export quotas. He points to past examples where trust between mills and growers allowed the market to work well without state help. He believes that a market-driven approach will naturally lead to better payments for growers because mills will compete for the best quality sugarcane.
However, Khalid Khokhar emphasises that the relationship between mills and farmers is the most important part of the industry’s success. He remains worried because farmers in some areas still struggle to get fair prices under the current system, and he fears deregulation might make this worse.
Reports show that in some districts, sugarcane rates have fallen as low as Rs400 per maund, which, according to Khokhar hardly covers the cost of production for many small-scale growers. The PKI is calling for a transparent framework that guarantees a minimum level of protection so that farmers are not at the mercy of large industrial groups or volatile global markets.
Farm leader lamented ‘unbearably high production costs’ have made agriculture uncompetitive. There is an urgent need to “rationalise input costs”, he said adding that growers are ready to take on international prices post-deregulation if their input rates match what competing countries’ farmers get. Zaka Ashraf is particularly concerned about the sudden change in government policymaking. Referring to a recent incident, he said the federal government issued a notification that went against its early commitment to extend the timeframe for the crushing season, leaving mills to begin operations on a few-day notice. He said that a large sugar mill’ operations are complex and require at least 10-12 days to hire labour, prepare machinery, and organise transport logistics.
At the same time, the PKI want to ensure that these operational schedules do not hurt farmers’ harvesting timelines. Unexpected delays can cause serious problems in the supply chain, which often significantly impacts small farmers as their crops lose weight and value while waiting at the mill gate.
Despite these ongoing issues, the production outlook for the current season is positive. Forecasts show that sugar production may increase by 10-15 per cent this year compared to the previous season, according to the PSMA chief.
To keep the market stable during this growth, stakeholders suggest the government focus on social safety nets rather than direct market control. This includes keeping a strategic stock of 300,000 tonnes for selling consumers at control rates to protect end consumers from price spikes.
