Sweeteners with a bitter taste

Raza Khan

Publishing Date: Tuesday, January 16 2007

This year, the sugarcane growers of the Northwest Frontier Province (NWFP), especially those in Mardan and Charsadda districts, after a long time, had expected good prices for their bumper crop. These sugarcane growers could have earned huge profits by turning their sugarcane into gurr ((brown sugar). Traditionally, a large part of the sugarcane produced in the two districts is used for making gurr, which is both exported and used locally as a sweetener since ages. Gurr made in Pakistan has a large market in Afghanistan and Central Asia, where it is also used in making wines. But the gurr producer have their hopes of making some quick bucks dashed after the federal government levied rather heavy duty on gurr exports to Afghanistan.

The central government has imposed Rs 250 as export duty on every sack of gurr going to Afghanistan. The move, the farmers fear, will have severely negative impact on the gurr producers of the NWFP.

In the local market, good quality gurr is available at Rs 2,900 a sack. Because of some recent increases in transportation costs, profit margin of gurr producers from export to Afghanistan was already thin. They have to pay Rs 12,000 for sending one truck-full of gurr to Afghanistan. A permit fee of Rs 8000 is also paid for every truck of gurr going across the border. The imposition of export duty over and above all these expenses is going to discourage sugarcane growing and gurr production, which will have severe implications for the economy of the NWFP. Gurr being one the main exports of the province, is a major sources of revenue for otherwise cash-strapped provincial economy.

Some months ago, the federal government had imposed 15 per cent sales tax on gurr. At that time, because of the sugar crisis, it seemed to be yet another endeavour to prevent sugarcane growers of the NWFP from turning to gurr production instead of selling their sugarcane produce to sugar mills. The sugarcane growers justifiably opposed the imposition of sales tax on gurr, calling it arm-twisting by the government to sell their produce to sugar mills on a price and terms and conditions which strongly favour the millers.

The sugarcane growers and many observers of the provincial economy apprehend that it is the influential lobby of sugar mill owners which is largely responsible for impacting the government's gurr policy. Many see a historical pattern which hardly allows economic policies in Pakistan to be framed for the interest of the people or the country. Instead, organised economic interest has always been dictating these policies. The imposition of sales tax and export duty on gurr is yet another example of the same government-corporate nexus. This does not augur well either for the sugarcane growers of the NWFP or the country.

The sugarcane farmers do not turn to gurr production without reason. The growers of the NWFP for the last ten or so years have started tuning their produce into gurr because it not only fetches comparatively more profit but also by doing so they can avoid the strong arm tactics of the sugar mill owners and managers. The high-handedness of the sugar millers has compelled many growers to stop growing sugarcane altogether.

The hard work that the sugarcane growers in the sugarcane growing districts of Charsadda, Mardan and Peshawar have to undergo warrants that they get a good price for their crop. This year they are being offered Rs 65 by sugar mills for buying 40 kilograms of sugarcane. To be fair to the growers, this can hardly bring any returns for them on the time and money they have invested on the crop. Last year the price the sugar mills were offering was just Rs 40 for 40 kilograms of sugarcane.

There appear to be two main factors behind the sugar price spiral in the country: Firstly, the indirect protectionist policy of the government for the sugar industry and, secondly, mill owners' exploitation of the sugarcane growers. The exploitation of the farmers has reached to such an extent that many of them have become least interested in growing a labour-intensive crop that brings them no profit. The diverting of the crop to gurr production is a panacea found by some growers of the NWFP to avoid stopping the growing of sugarcane altogether. This helps explain why gurr production does not have any role, as is being projected, in the sugar price crisis. Gurr is almost entirely produced in the NWFP and even in this province not all growers but only a part of them have switched over to gurr production. In other words, it's the farmers who have stopped growing the crop altogether who are at the heart of the sugar crisis.

The imposition of export duty on gurr will result in losing the international market for the product in Afghanistan, Central Asian Republics and Iran. This does not sound a shrewd policy. Instead, the government should have taken measures to encourage the export of gurr. Also, the government should have encouraged value addition of the product which can immensely increase its exports not only to the traditional markets but also to countries like India and regions like Africa. This can earn big foreign exchange for the country.

If the growers of sugarcane have started turning their produce to gurr production, they definitely have done so in their best interest and they have every legal right to do so. Discouraging them to do so is a counter-productive policy on the part of the government. Ultimately, it is the grower and the land on which hinges the production of sugarcane or for that matter production of any crop. If he is not satisfied with the what his hard work and investment earns him, he will simply stop producing what he produces or he will switch over to something else.

Sugar mill owners on the other hand have their own interests to protect and promote. Though they have every right to do so, this should not happen at the cost of the growers. The fact does not need any emphasis that the growers and not the millers are the most important factor in sugarcane and sugar production.

Some time ago sugar mills owners would argue that gurr producers did not pay any sales tax while sugar producers do. This prompted the government to impose 15 per cent sales tax on gurr production. Now with the imposition of the export duty, the question arises as to whether the government also provides similar credit facilities to gurr producers and sugarcane growers as it does to the sugar producers. The government has in fact banned electricity connection for gurr making installations

Sugarcane growers of the NWFP grow another crop -- mostly wheat -- on the land they use for sugarcane production. If the sale of their sugarcane produce is delayed, they find it hard to sow wheat on time. Firstly, because the land is not free in time for sowing the next crop and, secondly, the growers do not have money to buy inputs.

Last year, the federal government banned the export of gurr, a move that had cost dearly to the growers and had resulted in large-scale unemployment of agriculture workers. In view of this ban, it is strange that the government has now levied export duty on an item whose export has already been banned. The fact that the NWFP Assembly had condemned the imposition of ban on gurr export by the federal government is enough proof that even the authorities are working at cross-purposes in this country.

(The writer is a Peshawar based writer/research analyst razapkhan@yahoo.com)