Corporate Social Responsibility - Sustainable Development Policy ...

Studying the Sugar Production Process in PakistanIn all other countries the price of sugarcane is determined according to the sucrosecontent in sugarcane; however, in Pakistan the price of sugarcane is affirmedaccording to its weight. PSMA explained in the CCP investigation that in 2005 itwas decided in a meeting that price of sugarcane would be determined accordingto sucrose content but the decision has not been implemented. 32The pricing according to weight of sugarcane treats crops of varying quality inthe same manner violating principles of a market economy that bring efficiency.It must be noted that a crop with higher sucrose content contributes to efficiency;it reduces the cost borne by sugar mills while recovering sugar and this reductionin cost can be passed along the supply chain to the consumer as well. Furthermoredue to weight-based pricing growers are not encouraged to produce sugarcane ofbetter quality using improved production techniques.When it came to the deduction placed on quality of sugarcane many contestingreplies were received. One view held that there is no such deduction in existencebut there should be one legally levied. Others believed that a 10-20% deductionshould be in effect in times of bumper stock even if such deduction was not coveredlegally furthermore PSMA insisted that there are laws allowing deduction ofweight based on the quality of sugarcane. It must be noted that the percentagerate of the deduction is entirely random and does not follow any scientificdetermination. The third school of thought claimed “we are and always have beenagainst deduction on the basis of sugarcane quality. If a stock is of ‘unapproved’ variety wesimply refuse to buy it”. Again the judgment of whether a crop is of ‘unapproved’variety is established on experience of the team and no scientific tool is engaged.Farmers complained that the rate of deduction on the grounds of low quality ofsugarcane is fixed by the mill’s personal will they suggested the rate should be setthrough a proper scientific mechanism by research laboratories. It was foundthat the purchase staff of the factory determines the recovery rate of the cane thatis how much sugar can be extracted from a certain quantity of sugarcane this isnot done through the physical examination of sugarcane or any scientificmechanism. A farmer report further implied that the quality assessment is notdocumented since this deduction does not enjoy legal cover; the mill insteadproportionately lowers the weight of purchased cane in documents. 3332One-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 MARG33Farmer Report, Punjab Lok Sujag. October 2008ty 35