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TRAVEL by road between Sindh and Punjab this month and for the most part one feels as if one is travelling through a tunnel. Not the type Elon Musk is digging across the US for his hyperloop, supersonic train journeys. Ours is made up of trolleys laden with sugar cane, stretching across entire districts, nay provinces. Wasn’t the support price for sugar cane announced last October? Why then are tons of sugar cane lining the national highways in March 2018?
The sugar mills pay the farmers if and when they please. The farmers cannot wait indefinitely because they must sow crops for the next season. The later the crushing begins, the more desperate the farmer gets. This increases the likelihood of selling to middlemen much below the official price.
Most agriculturists in Pakistan fall in the ‘small farmers’ category. Leaving aside the large landholders in Sindh and southern Punjab, the average land ownership ranges anywhere between five to 10 acres in Punjab and 12 to 25 acres in Sindh. Depending upon land quality, water availability, and the financial resources for inputs such as seed, fertiliser and pesticides, most farmers are not able to fully utilise even the small parcels of land they own.
In Sindh, if one owns the land being tilled, approximately Rs50,000 investment is required for sowing an acre of sugar cane the first time. If the land is leased, throw in another Rs20,000 to Rs35,000 for yearly rent. Except for Tando Allahyar, Hala, and Ghotki, where yields could surpass 1,000 maunds (40 kilogrammes equal one maund) per acre, Sindh’s average yield swings between 600 to 800 maunds. In Punjab, per acre investment for sowing is around the same as in Sindh, but if the land is to be leased then throw in another Rs40,000 to 60,000 of rent per acre. The yields range from 700 to 800 maunds per acre.
Sugar mills pay the farmers if and when they please.
The support price of Rs182 per maund of sugar cane was almost half the price offered three years ago. The collusion between sugar millers, their brethren in government and their agents led to a very late beginning of crushing in December. All this while, the standing crop of sugar cane was losing weight as the cane continued to dry. This hurts only the farmer; the miller is a net gainer as the sugar content of the cane increases as it dries. Because of our national aversion to science and logic, let’s call it another form of collusion, between the millers and nature, perhaps.
Things would have not been rosy even if the farmers were able to get the official price of Rs182. No such luck. Since the millers are notorious for late payment to farmers, they turn to middlemen whose best offer averaged Rs120 per maund. Do not assume that the farmer will pocket this royal sum in its entirety. Sugar cane needs to be dropped at the mills. Depending upon the distance to the mill, and the going rate for the tractor, trolley and driver, and the number of days or weeks they’ll be parked in queues stretching as far as the eye can see, the farmer most likely ends up with only Rs95 per maund.
The math is straightforward. Take the lease investment example in Sindh, where the land is owned. If the average yield is 700 maunds, after all the machinations of the millers and agents, the farmer and his sharecroppers will be lucky to equally divide Rs10,000 profit per acre for toil ranging between a year to 18 months. Play with the variables discussed above all you like, owing to myriad other intangibles, practically every sugar cane farmer will go into the red.
Since there is no reduction in sugar price for the end consumer through all of this, some people may advise the farmers to move away from sugar cane altogether, just to stick it to the millers. Well, easier said than done. Though no one is going to slit their wrists over the sugar mills that will close, the millers will find some other racket to mint money. The labourers will find new exploiters. You and I will satisfy our sweet tooth cravings through imported sugar. However, the real winners will be those who export to us because they had better agri and market policies, and much higher yields than us.
At the current rate, all that will be feasible for us will be high-value crops, ie vegetables and fruit. You see, under the globalised economy we are supposed to meet all our needs of wheat and sugar and pulses and what not through imports from countries that have a comparative advantage producing all of this. But who will buy our surplus high-value produces because we are not on talking terms with some of our neighbours? The far-off markets have this thing called freight and logistic costs, standards and quality controls. And then there is this grey list thing threatening to morph into a black list thing, no shades of grey I am afraid. Sorry for the lack of sugarcoating though.
The writer is a poet and analyst.
Published in Dawn, March 29th, 2018
