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Pakistan’s sugar mafia snares subsidies worth $407 million

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Staff Writer | March 2, 2018
Pakistan’s powerful sugar mafia – dominated by political heavyweights – gobbled up subsidies worth Rs.45 billion ($407 million) during the crushing season in November and December last year, while declining to buy sugarcane from poor growers even at state notified prices.
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Food   Powerful sugar mafia
Instead of buying sugarcane from growers, millers got their crushing schedule delayed till late December by demanding that the government either procure surplus sugar from millers or allow “excess” commodity to be exported.

Pakistan’s powerful sugar mafia – dominated by political heavyweights – gobbled up subsidies worth Rs.45 billion ($407 million) during the crushing season in November and December last year, while declining to buy sugarcane from poor growers even at state notified prices.

Instead of buying sugarcane from growers, millers got their crushing schedule delayed till late December by demanding that the government either procure surplus sugar from millers or allow “excess” commodity to be exported.

Cabinet’s Economic Coordination Committee (ECC) ended up bowing to the powerful cartel, allowing the export of 1.5 million tons of sugar in November and granting a subsidy of Rs 10.70 (9.67 cents) per kilogram. This cost over Rs 16 billion ($145.7 million) and was done despite it not having any allocated funding.

And in December, the ECC backed a proposal by the Punjab government to procure about 300,000 tons of sugar for export. This meant the government doled out a further Rs 15 billion ($135.6 million) to millers.

Intriguingly, the Sindh provincial government sanctioned an additional freight subsidy of Rs 9.30 (8.41 cents) per kilogram in violation of a decision by the Council of Common Interests (CCI).

The CCI turned down a proposal for freight support in November. These support measures saw the politically connected sugar ‘mafia’ accumulate a whopping $407 million in benefits.

Wealthy politicians who rule the federal and provincial governments own the majority of sugar mills in Pakistan.

The government gave an impression that the subsidy and procurement methodology would help millers to acquire sugarcane from growers at the prescribed rate and ensure timely payments to farmers. But sadly, the procurement of sugarcane was not regular and farmers did not get paid at the notified rate.

“The huge subsidy to the sugar mills did not benefit the poor growers, who are paid Rs 120 ($1.08) per 40 kg, as against the official rate of Rs 182 ($1.82),” the president of Pasban-e-Pakistan (PP), Altaf Shakoor told Asia Times. PP is a Karachi-based socio-political group that fights for social justice and democracy.

The whole story here.


 

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