Sugar daddies
Sunday, September 20, 2009
Dr Farrukh Saleem
Pakistan has three sugar grand-daddies. They are: Pakistan Sugar Mills Association (PSMA), Pakistan Banks' Association (PBA) and All Pakistan Cement Manufacturers Association (APCMA). Our three sugar grand-daddies have, over time, hatched and bred 149 individual sugar daddies. The PSMA now has a litter of 80 little bambinos, the PBA has 48 and the APCMA 21; a total of 149 sugar daddies for 180 million hapless Pakistanis. Remember, sugar daddies -- just like parasites -- cannot live alone, they need a host; a host to suck on and a host to benefit from.
The sweetest of all our sugar daddies is our sugar lobby. This crushing season the PSMA is determined to crush 50 million tons of sugarcane first and 180 million sugar consumers later. If a sugar daddy is determined it remains only to act. Knowing full well that not a man, woman or child will come down from consuming at least 25 kilos of sugar this year our sugar daddy stands to net around Rs80 billion. That means each man, woman and child will have to cough out an additional Rs450 so that 80 of our sugar daddies can make their billion each. Talk about transference of wealth -- from 180 million to 80.
In August, the Competition Commission of Pakistan (CCP) issued a 'Policy Note' to the Ministry of Industry and Production cautioning that "whether or not the government has conceded to the pressure applied by the sugar mills, to avert the possibility of the threat issued earlier, the mere act of entering into such an agreement (that fixes prices) constitutes a violation under Competition Ordinance, 2007." In September, the chairman of the CCP was sacked by the prime minister. Talk about the Islamic Republic -- a silent spectator or an active accomplice.
Our next sugar daddy is the PBA with 48 member-banks. You go and try depositing your hard-earned savings and they won't give you more than five or six per cent. You go and try getting a loan and they want 18, 19 or even 36 per cent. As of the last day of July, they held deposits amounting to Rs4 trillion. As of the last day of August, their advances stood at Rs3 trillion and their investment at Rs1.3 trillion.
A total of 30 million Pakistanis have bank accounts and some 7 million Pakistanis are regular borrowers. The high interest rate spread -- the difference between deposit and lending rates -- discourages savings as well investments (and slows down the economy). The PBA rips off depositors and bleeds borrowers. Talk about transference of wealth -- from 30 million to 48. Talk about transference of wealth -- from 7 million to 48.
Our third sugar daddy is the APCMA. On May 8, 2003, all 21 member-mills sat behind closed doors and drew up an agreement with respect to 'production quotas, supply of cement and targeted price level'. In June 2003, the APCMA all member-mills raised the prices in unison by Rs35 per bag. By April 2006, price per bag had skyrocketed to Rs350. In February 2007, there was another sharp jump in prices. Over the six-year period commencing in 2003, this sugar daddy may have raked in Rs50 billion by managing to 'prevent, restrict and reduce competition'. According to the CCP, "the economy as a whole, and the consumer in particular, have long suffered as a consequence of the 'near-criminal' conspiracy by the cement manufacturers." Talk about transference of wealth -- from 180 million to 21.
For the record, three out of four Pakistanis make Rs150 a day or less while there has been multi-billion rupee transference of wealth from 180 million to 149 sugar daddies. Remember, 180 million are a mere statistics, sugar daddies are for real.
The writer is the executive director of the Centre for Research and Security Studies (CRSS). Email: farrukh15@hotmail.com
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