The ban by the Punjab government on the setting up or expansion of sugar mills in cotton growing areas, now upheld by the Supreme Court, should serve as a rationale for allocating the cultivable land among competing crops.

This is how the crisis of over- and under-production in agriculture can be avoided, and commodity prices stabilised. In case of sugar, water availability is another issue.

Announcing a 30-page verdict on July 25, the Supreme Court judge Justice Ejaz Afzal said, “The fact that there were a number of reasons justifying the issuance of the impugned notification (of 2006) and each reason is itself sufficient to be categorised as constituting the public or national interest’.

The court made it clear that the decision to impose the ban was not to benefit or punish anyone but to ‘ensure organised and planned growth’ of the industry

The notification as well as 2008 decision of the industries department of Punjab refusing permission to establish mini-sugar plants was challenged in the Lahore High Court but a single member bench of the LHC rejected the petitions on February 26, 2013.

Challenging the LHC verdict before the Supreme Court in 2013, the four appellants contended that the ban was violative of Article 18 of the Constitution and is also mala fide ‘as the big tycoons of sugar industry controlling the production and prices of sugar are opposed to the establishment of new sugar mills for these will harm their monopolistic interests’.

The SC verdict, quoting a senior counsel, noted that districts of southern Punjab were traditionally cotton growing areas and it was in recognition of this fact that notifications, including those of 2003 and 2004, were issued to stop the setting up of new sugar mills and expanding the installed capacity of the existing ones to ensure that the cotton crop is not substituted with sugarcane.

Expansion in the areas growing sugarcane has been ‘economically, agriculturally and ecologically, disastrous’ because the cotton industry is the backbone of the industrialised Pakistan, making value addition to the raw material (cotton) and earning considerable foreign exchange for the country, which heavily relies on such earnings.

The Supreme Court judgment, which was reserved on June 23, also refers to a company seeking relocation of its sugar mills installed in district Pakpattan to district Bahawalpur at a place near the border with district Rahimyar Khan. Its competitor sugar mills opposed the proposed shifting as it would increase the installed capacity of sugar mills in the southern Punjab districts which they claimed is not sustainable since available installed capacity is already under-utilised.

However, the counsel of the sugar mill opposed their objection by referring to a document to show that the cultivation of sugarcane crop in the area has considerably increased if the figures for the years 2005-2006 are compared to those of 2014-2015.

The court made it clear that the decision to impose the ban was not to benefit or punish anyone but to ‘ensure organised and planned growth’ of the industry. The decision was taken after considerable deliberations and was in conformity with the advice of experts of the relevant departments, including agriculture, food and industries.

Meanwhile, sugar mill owners continue to be denied the subsidy they were to receive in 2013 as the National Assembly’s standing committee on industries and production has again on July 21 refused to withdraw an ‘inquiry authentication’ case from the National Accountability Bureau (NAB) against ‘unconvinced’ inland freight subsidy of Rs 1.75 per kg given to sugar mills. Presided over by Asad Umar, chairman of the committee, the meeting discussed the issues of inland sugar subsidy.

The ministry of industries, its joint secretary pointed out, had opposed the inland freight subsidy to sugar mills but it was allowed by the ECC. The total amount of subsidy was Rs1.2bn. The chairman did not agree with his arguments, saying neither commerce ministry, nor industries ministry shared accurate information with the committee which represents parliament.

Chairman Pakistan Sugar Mills Association, Sindh, pointed out that the government has also to pay Rs3.6bn of subsidy to sugar mills against recent export of 253,000 tonnes in December 2015 and January 2016. He requested the committee to withdraw case from NAB against the subsidy which Asad Umar refused to do, saying that he was not asking the government to stop payment of subsidy to mills. He explained that the committee has asked the NAB only to hold an inquiry as to why the subsidy amount was Rs1.75 per kg and not Rs1.50 per kg or Rs1 per kg as it was informed that PSMA had sought Rs5 per kg.

Meanwhile, a sugar mill in Punjab was ordered on July 12 by the Lahore High Court to sell its stock and deposit the money with it for payment to the farmers who worked hard to produce sugarcane for the mill. The order comes following complaints by the farmers about non-payment of dues and the chief justice had on June 24 ordered the seal-off of the mill because it owed dues to the aggrieved farmers up to Rs870m. However, the cane commissioner informed the court that the mills had been sealed off and that its stock of 400,000 sugar bags confiscated.

Published in Dawn, Business & Finance weekly, August 1st, 2016