End 2016 the Economic Coordination Committee of the Cabinet, at the time led by Federal Finance Minister Ishaq Dar, decided to allow export of sugar surplus subject to the domestic price of the commodity not rising as a consequence. Additionally, any difference between the domestic and international prices of sugar was to be subsidised by the federal and provincial governments on a 50:50 basis. This decision reflects an entire range of disturbing factors at play: higher farm input costs in Pakistan relative to the rest of the world, higher profitability of sugarcane farmers relative to other crops, including cotton and higher than the budgeted deficit as sugar exports are subsidised.
The sugar industry is represented by the Who’s Who of Pakistani politicians/influentials who have visibly manipulated policy to benefit themselves. In the provisional figures released by the Economic Survey 2016-17, area under sugarcane cultivation rose from 1,129,000 hectares in 2012-13 (inclusive of the last nine months of the PPP-led coalition government and three months of the Caretakers) to reach an all time high of 1,217,000 hectares by 2016-17 - a rise of 8 percent. In contrast, area under cotton cultivation has been declining – from 2,879,000 hectares in 2012-13 to 2,489,000 hectares last year – a decline of 13.5 percent.
The Economic Survey reluctant to lay the blame on the government’s flawed sugar and cotton policy maintained that the rise in area under sugarcane production reflected a shift “from other competitive crops facing frequent distress, as for example cotton crop which suffered on account of pest attack.” One would have recommended to policymakers to formulate and implement appropriate measures to ensure that there is no repeat pest attack the following year through providing the subsistence farmers means (funds to undertake measures to forestall a pest attack) as well as disseminate relevant information. The Economic Survey in the section on cotton output notes besides reiterating the pest attack as being a major factor in the lower area under cotton cultivation, an additional factor notably “low domestic prices at the sowing time that pushed growers away from cotton and towards other competitive crops (sugarcane and maize)”. Data indicates that cotton cultivation from 2012-13 to 2016-17 declined by 390 hectares while area under sugarcane cultivation rose by 912 hectares and maize cultivation area rose by 274 hectares.
Cotton contributes one percent to the country’s Gross Domestic Product and 5.2 percent to value-addition in the agriculture sector. And the Economic Survey section on manufacturing points out that Pakistan has an inherent advantage of being the fourth largest producer of cotton in the world with a huge potential for further increase in crop yield; it also correctly maintains that “for the success of any export-led industry, local availability of basic raw material is an added advantage as it is a key factor in lowering costs of production”. Unfortunately, with the decline in cotton output attributed to a rise in sugarcane area under cultivation there has been a steady rise in cotton imports while sugar exports are subsidised which account for a higher than the budgeted deficit.
Agriculture is a devolved subject; however, there is an emergent need for the government together with the provinces to undertake remedial measures or else continue to face a decline in cotton output, a rise in surplus sugar requiring large budgetary injections for export, and a steady decline in exports.
