Amid the ongoing political turmoil in Islamabad, the release of annual industry report by Pakistan Sugar Mills Association (PSMA) for 2020-21 season, has gone virtually unnoticed. BR Research has taken the opportunity to measure the influence of politically affiliated (PI) business groups in the industry, and whether the same has changed in the aftermath of the much publicized FIA inquiry.

Regular readers would recall that BR Research had first flagged the issue of the overwhelming political footprint in the sugar industry nearly three years ago. (For more, read “Mapping political footprint in the sugar industry’, published in this section on 02 May 2019). In a series of articles published at the time, it was highlighted that due to their high market share, politically affiliated (PI) sponsor groups were overwhelming beneficiaries of the export subsidy extended between 2017 and 2019. This was long before Pakistan was hit by a sugar price spiral in early 2020. Since then, various inquiries by FIA and CCP have afforded the issue much attention in the media, with political parties across the spectrum engaging in mudslinging to score mileage.

But before delving into the findings, it is important to emphasize one caveat. The analysis is only factual and restricted to the data available publicly through PSMA, and does not imply any wrongdoing or misuse of influence by any named business groups, whether politically affiliated or not. While analysis into sponsor group share in export subsidy published in the may have implied exercise of influence, no export subsidy or monetary benefits have been extended to the industry in recent years. In fact, it may even be argued that the industry has been subject to unnecessary scrutiny by investigative agencies during PTI’s tenure.

Now to the findings. Beyond the termination of permission to export, has share of various politically affiliated business groups changed in the aftermath of the inquiries? Unsurprisingly, no. Between MY18 (2017-18) and MY21 (2020-21), sugar mills owned by PIs contributed nearly half of industry’s total output, barely dropping from 51 to 49 percent.

But the devil is in the details. Consider that most politically affiliated sponsor groups that were prime targets of criminal investigations saw their fortunes change dramatically. Of note is the performance of industry leader JKT group, which fell out of favor with the PTI government in the aftermath of the probe. Market share of the 6 sugar mills owned by the JKT/JDW group dropped from 19 to 16 percent between MY18 and MY21.

Similarly, out of the 7 sugar mills allegedly owned by Sharif family, four went out of business and did not operate during the 2020-21 crushing season. But interestingly, the group’s total market share rose during the latest year, as all 3 remainder units saw output increase by minimum 40 percent to up to two times! Turns out, fortunes did not exactly turn for the worse for PTI’s archrival!

The most dramatic shift was witnessed in Sindh. The 9 sugar mills allegedly owned by Omni group - whose ultimate beneficial ownership allegedly rests with Asif Ali Zardari - saw market share drop from over 5.1 percent to a little under 1.4 percent; declining to nearly one-fourth of where it stood before PTI came to power. This is uniquely surprising, especially considering that sugar industry is regulated by provincial government, and PPP continues to hold power in Sindh.

But the most curious change is recorded in the output of PI sponsor groups that did not fall out of favor with Imran Khan-led government. The late Gen. Akhtar family – whose scions became part of PTI in the run up to 2018 elections - saw its market share rise from 3.4 to 5.6 percent. Similarly, the market share of sugar mills owned by late MakhdumRuknuddin family rose from 10.4 to 12.9 percent. Note that these two business groups are among top three industry players, and seem to have gained the market share lost by JKT group.

Without drawing many conclusions, it would appear that while inquiry into sugar industry’s political influence may have remained talk of town during PTI’s tenure; fortunes of those politically affiliated – especially the two business groups that were part of PTI’s government – hardly saw any significant shift. So much for movement for change!