Daily Times

KARACHI: The Competition Commission of Pakistan (CCP) has termed the Sugar Act outdated, saying that it was no longer serving any purpose.

The CCP has recommended that the provincial governments should review their legislative frameworks covering the sugar sector. “All provincial governments should review legislations to limit government intervention and to bring their laws in line with the recommendations of CCP,” it said.

Earlier this year, the CCP had taken notice of the sugarcane procurement crisis in the country and convened open hearings to discuss competition concerns of the sector with stakeholders.

After an open hearing, the Commission observed that due to excess supply, a surplus was created in the market. “This surplus has created a conflict between the farmer and the miller, the former producing a quantity and expecting a payment in accordance with the government determined price floor while the latter finding the proposition unviable. The problem is further exacerbated by the inability of the mills to export their sugar at internationally competitive rates,” the CCP noted.

It said that most of the millers were heavily reliant on sugar as a product and were not diversifying to reduce costs. On the other hand, the government departments appeared to be lacking in their assessment of price floor by either being unaware of its impact on production of sugarcane, and consequently sugar, by not indulging in active forecasting, or if they were aware, they had apparently failed to factor that in with regard to determination of the sugar cane price.

“The sugar sector suffers from inefficiencies at all levels. Serious efforts are required to design appropriate government interventions, improve sugarcane quality, enhance and diversify production processes, and improve export competitiveness,” the CCP recommended.

Further, the CCP recommended that while calculating the cost of production of sugarcane, the federal and provincial departments must undertake detailed field visits and rely on firsthand knowledge, duly acknowledging the divergent conditions and factors prevalent in different areas, in the interest of accuracy.

The Commission suggested that while fixing the price of sugarcane, price floors or any applicable support price of other crops must also be considered so as not to discourage farmers from growing those crops.

“Any policy regarding determination of price floor for sugarcane must take the emphasis away from weight and shift it to quality, so that farmers have an incentive to shift toward more efficient methods and be rewarded accordingly. Farmers producing higher quality sugarcane must be paid a premium against farmers who grow relatively inferior product”.

Regarding any artificial shortage of sugar supplies on the retail/wholesale or mills’ end, the Commission suggested that the government, through TCP, could maintain certain amount of reserves of sugar as a check/deterrent for any such market manipulation.

The CCP also recommended that the government could consider setting up a committee comprising all pertinent departments dealing with the sugar sector at federal and provincial levels in addition to representatives of farmers and mill owners.

Published in Daily Times, May 4^th 2018.