The row over sugarcane prices is assuming critical proportions. The latest news is that the federal and Sindh governments are totally at odds over the issue of fixing sugarcane support price as the latter has refused Ministry for National Food Security’s demand to raise the price of sugarcane from Rs 155 to Rs 182 per 40 kg. In a statement issued on 5th December, 2014, Minister for National Food Security, Sikandar Bosan had described Sindh government’s new sugarcane price as “unfair, unjust and arbitrary”, demanding the restoration of price at Rs 182 per 40 kg immediately. Bosan said that the Punjab government had fixed the price at Rs 180 and Sindh government at Rs 182 per 40 kg but the latter had now reduced it to Rs 155. Sindh Agriculture Minister Ali Mehar responded by saying that the provincial government’s notification in respect of sugarcane price was interim and the federal government should not interfere in the province’s affairs. Further, federal government should have taken the decision on sugarcane price at least 4 months before the crushing season. In Sindh, crushing season had already been delayed by 2 months.
The conflict between sugarcane growers and millers was even more intense. Kisan Board of Pakistan (KBP) has, for instance, alleged that sugar millers in Punjab are trying to fleece growers by threats such as closing down the mills, delaying the crushing and such other tactics. According to the KBP, sugar millers had joined hands to buy sugarcane from the growers at throwaway prices despite the fact that farmers were not satisfied even with the minimum support price of Rs 180 per maund announced by the provincial government. Industrial mafia had first deprived paddy and cotton growers from their due right and now they were bent upon looting the sugarcane growers. It was alleged that majority of mills belonged to members of the parliament so nobody was taking notice. The body of farmers warned that if notice of this exploitation was not taken, farmers would bring the whole country to a standstill and responsibility of that situation would rest on the rulers.
The tone of the stakeholders in the conflict shows that tempers of the various stakeholders engaged in the dispute are coming to the boil and the matter may come to a head if the issue was not resolved soon. In fact, if the issue is allowed to linger further, there is a risk of sugarcane crop to lose its peak yield with its considerable negative impact on the incomes of the farmers. In the process, growth of agricultural sector could be retarded and the employees in the mills could find themselves redundant. It needs to be mentioned, nonetheless, that such a sorry situation is in evidence almost every year but the intensity of squabbling is much more this time. Seen closely, every party to the conflict would appear to be right in its reasoning. The federal government would like to play a balancing act between the growers and sugar millers by ensuring a reasonable margin of profit to both. However, whether it has been successful in its effort is difficult to say because of numerous variables to be considered for the exercise and a very strong clout of both the growers and sugar millers in the parliament and the government. In fact, most of the analysts believe that determination of minimum support price in a particular year depends on the relative strength of a group in the government during that year. After the latest amendments in the constitution, the practice of determining support prices may also give rise to a new dimension to the conflict, ie, whether power of such a determination was now with the federal or provincial governments.
We believe that this is time to also analyse the issue from another angle. It could be easily argued that though farmers’ interest is important but the government should avoid interfering and let the market forces determine the prices of all the goods and services produced in the country including those of food crops and agricultural inputs. Such a strategy would reduce the burden of subsidies on the budget, which is the need of the hour. Besides, the change in policy on these lines would maximise productivity in the agriculture sector as farmers would respond by shifting acreage under various crops according to the price signals prevailing in the domestic and international markets. A sugarcane grower, for example, need not be a sugarcane grower for ever as he could change his production pattern to get the maximum benefit from his limited resources under a changed scenario. Above all, the new policy framework would protect the interests of consumers as well who are mostly residing in cities as they have got to bear the brunt of increase in support prices of agriculture commodities year after year. Exports too would be facilitated due to the compatibility of prices in the domestic and international markets and the government would not be obliged to pay subsidy on exports. In a nutshell, it needs to be studied very seriously whether it is economically desirable for the government to be in the business of price determination with the added disadvantage of being blamed for favouring or ignoring the interests of a particular party almost every year. As things stand, the government could put its energies to better use by abdicating this field of activity. As the protest of growers mounted in Sindh, the provincial government raised the price of sugarcane to Rs 182 per maund but the observations and conclusions of this editorial still continue to hold. In fact, the raising of price under pressure shows the inability of the Sindh government to stand its ground against an onslaught by powerful groups.
