In Pakistan, sugar shortage sours public mood

Critics charge that the owners of Pakistan's sugar mills have conspired to fix prices and hoard sugar stocks, creating a shortage this fall that has led to riots and protests, arrests and raids, and even intervention by the Supreme Court.
By Pamela Constable
Washington Post Foreign Service
Saturday, November 28, 2009

KANJWANI, PAKISTAN -- From the busy and bucolic scene in this Punjab province village, it is hard to tell that Pakistan is in the throes of a national sugar crisis. Fields of tall green cane line the roads, and flatbed trucks piled with ripe stalks head for a modern mill that steadily crushes tons of cane into refined white crystals.

But 200 miles north, in the crowded and chaotic city of Rawalpindi, the frustration of people waiting in long lines for emergency sugar rations often erupts into tirades against the government, the hoarders, the black marketeers and especially the wealthy families that dominate Pakistan's lucrative sugar industry.

"Without sugar, my children will be crying when I get home. It is all because of strong people, the big owners and traders who have a lot of influence," said Syed Inayat, 40, a trash collector who was waiting for his sugar ration outside a government store one recent morning.

Half a century ago, a sugar shortage helped bring down Pakistan's military regime. For the past four months, a similar shortage has led to skyrocketing prices and empty market shelves, sending consumers and officials into a panic. The protracted drama has been marked by riots and protests, arrests and raids, accusations of price-fixing and hoarding, rationed distribution in cities and direct intervention by the Supreme Court.

The owners of Pakistan's 82 sugar mills have been the main targets of public wrath and official intervention. Critics and consumer activists charge that these agro-industrialists have conspired to fix prices and hoard sugar stocks.

"Rarely, even in the rancid annals of Pakistan's politics, has there been such a display of rampant and shameless self-interest," scolded the News International newspaper in an editorial titled "The Robber Barons." It described Pakistan's sugar-mill owners as "a particularly odious clutch" of tycoons who are "fleecing the pockets of the poor."

Such hyperbole has provided delicious distraction this season for a nation that has been exhausted and frightened by a relentless barrage of bad news: suicide bombings, tensions with Afghanistan and India, and mounting troop casualties as Pakistan's army battles Islamist extremists in the northwest.

But the accusations have also been given serious ammunition by the Competition Commission of Pakistan, a small and beleaguered government agency that has been struggling for two years to strengthen toothless anti-monopoly laws and has brought antitrust cases against domestic cement, fertilizer, cellphone and other industries.

In September, commission chairman Khalid Mirza ordered surprise raids on the three main offices of the Pakistan Sugar Mills Association. According to the panel's report, the investigators found numerous documents that showed "extensive institutionalization of collusive behavior" among mill owners, including agreements on cane and sugar prices. It was a rare glimpse into the inner workings of a privileged and insulated economic microsystem.

"I bend over backwards to be fair, but there are huge moneyed interests against this law," Mirza said in an interview in Islamabad, the capital, where legislators linked to major industries, including sugar, have been scrambling to kill the anti-monopoly bill. "We are not out to punish, but we want these industries to adopt fair and reasonable practices," he said. "We are not going to flinch."

Pakistan is a nation of unabashed sugarholics, who heap the crystals in their breakfast tea and devour cakes at every special occasion. Sugar may be far less important to the national diet than wheat or cooking oil, but it looms much larger in the national psyche. And although Pakistan's judiciary is often viewed as a handmaiden of the ruling rural elites, the courts have stepped into the fray on behalf of consumers. The Supreme Court, headed by crusading Chief Justice Iftikhar Mohammed Chaudhry, has upheld a September ruling by a Punjab court capping the retail price of sugar at about 25 cents a pound.

The government bureaucracy moved tardily to defuse the crisis. This month it imported 700,000 tons of sugar for distribution to more than 5,700 state utility stores across the country. Beginning two weeks ago, consumers were finally able to buy sugar at a subsidized price -- even though it often ran out and private shops continued to charge almost double.

The mill owners went on the counterattack. In news releases and TV interviews, they denied behaving like a cartel and accused the government of exacerbating the sugar crisis. The group said officials ignored its early warnings of a cane crop shortfall, then overreacted and intervened in arbitrary ways that worsened the problem.

"The media calls us a cartel, but it is all garbage," said Haroon Akhtar Khan, a senator from an influential family who is managing director of the giant Tandlianwala Sugar Mills. He described the sugar business as a series of complex, price- and time-sensitive negotiations with growers, traders, bankers and officials. "I don't hoard or collude or manipulate, but I do need to sell my stock at the right time."

In Kanjwani, a bustling village, the Tandlianwala mill hummed with activity as its presses, vats and conveyor belts chewed up tons of raw cane and converted it into hundreds of bags of pristine sugar. The immaculate compound contained rose gardens, fish ponds and a school for employees' children.

In the lush surrounding countryside, where hundreds of farmers grow cane to sell to Tandlianwala, it was clear from the busy shops and ubiquitous motorcycles that sugar had been good for the local economy. Still, cutting cane -- whether for a feudal landlord or on a tiny family plot -- remains a harsh, backbreaking way to earn a living.

Jan Mohammed, a toothless, illiterate tenant farmer in his late 70s, grows cane on a single rented acre, cutting and loading it by hand, as he has done for 50 years. He estimated that he would earn about $50 for his current crop.

"There is a crisis in sugar because the strong people kept it for their own gain," Mohammed said. "I blame the owners, the traders and the government, too. Next season, I'm going to switch to wheat."

© 2009 The Washington Post Company