Minister for Energy Hammad Azhar on Wednesday said the report of the Sugar Reforms Committee would be shared on Thursday (tomorrow) through all mediums in collaboration with the ministry of information.
“The Sugar Reforms Committee chaired by me has presented its recommendations to cabinet,” he wrote on his official Twitter handle.
He said that Prime Minister Imran Khan had instructed that report be released and discussed publicly for the next three weeks. “The thrust of reform is towards deregulation, documentation, enhancing competition in sugar sector.”
The Sugar Reform Committee chaired by me has presented its recommendations to Cabinet. The PM instructed that report be released & discussed publicly for next 3 weeks. The thrust of reform is towards deregulation, documentation, enhancing competition in sugar sector. 1/2
— Hammad Azhar (@Hammad_Azhar) December 15, 2021
On Tuesday, the federal cabinet mulled over the committee report and decided that a “public debate” would be held for three weeks for taking input from different stakeholders on the sugar sector reforms.
Regarding the cultivation and purchase of the sugarcane crop, the Ministry of Industries and Production’s report has recommended that sugarcane prices should be determined by market forces and suggested the abolition of indicative prices.
The report also recommended that the “government would no longer regulate the indicative sugarcane prices and ex-factory sugar prices would be deregulated with effect from crushing season 2023”.
To abolish the clause dealing with indicative price, it recommended an amendment to the Sugar Factories Control Act, 1950. However, they proposed that two to three years’ time should be given to the farmers to make adjustments.
According to the report, the pricing of sugarcane should be determined in accordance with sucrose content.
It added that the provincial government should provide the latest equipment and laboratories to the cane commissioners for testing the sucrose content and implementing the new pricing mechanism.
Also, it suggested that “there should be no zoning of crops and the government needs to provide incentives” on the crops which were earners of foreign exchange, such as cotton.
Also read: ‘No sugar shortage in country’
Suggesting the required action, it stated that abolition of legislation, if there was any, by provincial governments regarding zoning of crops and leaving the choice of what to grow to the farmers or market forces. It, however, stated that at present there were no laws in Pakistan on the zoning of the crops.
The third recommendation stated that there should be adequate pricing of water on a volumetric basis to avert market failures. The step will remove externalities and lead to the incorporation of the actual cost of production of sugarcane, it said.
It suggested that legislation by provincial agriculture and irrigation departments on the supply of water to the cropping areas.
The report, while suggesting the abolition of the Sugar Factories Establishment and Enlargement Act, 1966, by the provinces, further recommended that there should be a free choice of area for crop cultivation for farmers as well as for the private sector for setting up sugar mills.
The report suggested to the government to invest in efforts to improve seed technology and study beet sugar cultivation; provision of low-cost financing for farmers for purchase of inputs; and improvement in forecast and provision of accurate data of sugarcane crop.
The report came after the Sugar Advisory Board (SAB) took serious notice of the sugar price hike in November 2019. On the recommendations of the SAB, the government of Punjab fixed the prices of sugar in November 2019.
Later in January 2020, the SAB felt that there was a real shortage of sugar, which was also exerting pressure on the prices. Resultantly, on its recommendations in February 2020, the government not only banned the export of sugar but also allowed its import.
Pakistan has a total of 90 sugar mills with 45, 38 and 7 in Punjab, Sindh and Khyber-Pakhtunkhwa (K-P) respectively. In 2020-21, the report stated, only 78 sugar mills were functional – 40 in Punjab, 32 in Sindh and 6 in K-P.
The total crushing capacity of these mills was about 800,000 tonnes per day, according to the report.
However, it added that the actual capacity utilised by the mills was dependent on sugarcane production in any season.