A comparable analysis of sugar inquiry report & industry response

The release of forensic inquiry report on sugar sector is due at the end of this week. While the spade of inquiry in practices of various industries such as wheat & flour, sugar, and IPPs is a welcome sign, the inquiry in the sugar sector appears to be at the risk of being jeopardized due to accusations of partisanship and marred by allegations of political influence.

While there is little doubt that the sugar industry in the country over the years have exercised its political influence, in that it is no different than other organized segments of the economy that exercise influence with regulators in direct or indirect ways. The sugar industry, however, stands out, in that over 51 percent of market share is controlled by players with direct political affiliation. This fact alone accounts for the disproportionate attention received by the sector both in the media and corridors of power, even though some commentators point out that the findings of wheat report may be far more consequential.

It is in that spirit that BR Research has made an effort to map the findings of the report on sugar sector,  and draw a comparison with the detailed rejoinder released by Pakistan Sugar Mills Association (PSMA), analysing claims and counter-claims made objectively in light of facts and data available in public sphere.

It is sincerely hoped that this effort will help ensure that the gains made by independent commentators in mapping the political footprint of the industry, and, more importantly, that the regulatory distortions endemic in sector’s governance are highlighted more prominently instead of names of one sponsor group or the other.

It should be remembered that names of those who exercise influential keep changing depending on whether they are in favour with those who wield real power. Thus, while naming politically influential sponsors may help addressing the symptom, it will not address the cause: that is, the broken colonial laws that continue to govern the sector.

Political patronage attracted by any productive segment of the economy can only last for so long as the sector is protected from competition, and the barriers to entry allow few players to monopolize bargaining power. If these distortions are addressed, the footprint of politically influential shall become inconsequential.