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Studying the Sugar Production Process in Pakistandiesel, machinery employed, depreciation of machinery, irrigation related costs,land rent. 26The indicative price is submitted with considerations such as the aim of protectinggrowers’ interests as well as to not discourage cultivation of other crops by keepinga very high indicative price. To reach an efficient concluding price range or priceit is important that the study conducted by branches of the Government is donein an “independent and credible manner” otherwise the ‘support price’ will failto accord protection to the grower’s interest. It was admitted by the Governmentof Punjab during the investigations by CCP that no specialized exercise was doneto arrive at the ‘support price’ the same situation persisted in other provinces. 27The data is usually provided by PSMA and there is no definite or credible basisfor verifying the genuineness of cost-related data presented.Legally the sugarcane procurement rate is fixed to show a minimum price butmanagers believe that if they offer a higher rate to farmers it will be “illegal”. Allmanagers readily asserted that they promoted fair competition. There was aconsensus on the practice of fixing procurement rate for sugarcane; they addedthat the mechanism was fair and efficient for the market. Some managers didsuggest that price of sugarcane should be set keeping in mind prices of othercommodities more particularly a fair margin for millers should be considered. Inthe National Sugar Policy document the Government agrees that sugar priceshould be determined by the market forces since cost of production of sugar isdifferent for every mill. 28 All farmers agreed that it is wise to set a procurementrate for sugarcane; however it was pointed out that farmers have no say in fixationof rates, some respondents added that there is a representative of farmercommunity but the farmers have only heard of this entity. Moreover it was addedthat rates should remain constant form beginning of the manufacturing year tothe end. The CCP officer repeatedly pressed that the there should be a free marketpresiding the sugar industry and if not so then the rates should be decidedaccording to the cane content. Below is a table presenting the support prices foragricultural crops.26One-man Commission Report, Competition Commission of Pakistan. 2009 (REPORT OF THE COMMISSION APPOINTEDBY THE HONOURABLE SUPREME COURT OF PAKISTAN, THROUGH ORDER DATED 2.10.2009 IN THE TITLEDPETITIONS, TO DETERMINE THE COST OF PRODUCTION AND PROFIT MARG27One-man Commission Report, Competition Commission of Pakistan. 2009 (REPORT OF THE COMMISSION APPOINTEDBY THE HONOURABLE SUPREME COURT OF PAKISTAN, THROUGH ORDER DATED 2.10.2009 IN THE TITLEDPETITIONS, TO DETERMINE THE COST OF PRODUCTION AND PROFIT MARG28National Sugar Policy, Government of Pakistan. 2009-10y 33
Table 6: Procurement/Support Prices of Agriculture Commodities 29Corporate Social ResponsibilityIt was clearly specified in the National Sugar Policy that the price of sugarcane isto be set according to sucrose content instead of weight. It was announced thatthe “mechanism of pricing sugarcane on sucrose content shall be introduced in all the provinces.”The prices were to be set on the basis of variety at first and later internationalpricing methodologies will be introduced. Moreover, to implement this decisiona test case was to be established; two to three mills in each province would beencouraged by the Government to adopt this pricing practice for the year 2009-10. 30 According to the interviews conducted for this study in 2012 every managerdid agree that prices should be fixed in relation with quality of the crop yet nosuch mechanism was in place in Pakistan at the moment. Mills in Sindh havepaid premium based on sucrose contents to all growers but this brings about theproblem of asymmetric information providing growers of inferior quality a freeride.3129Economic Survey 2009-1030National Sugar Policy, Government of Pakistan. 2009-1031Competition Assessment Study on the Sugar Sector in Pakistan, Competition Commission of Pakistan.y 34
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