Two years after Prime Minister Imran Khan came to power, he sanctioned an investigation against sugar mill owners in the country.
The report that resulted affirmed what most experts already knew: the industry operates like a cartel, duping stakeholders — government, farmers, taxpayers, and consumers — without any accountability or transparency. Farmers were cheated, taxes were evaded, unjustifiable subsidies were granted, and political influence was abused.
Research Intern at the Wilson Center, Washington DC Uzair Sattar writes in his blog for the London School of Economics South Asia Centre published on September 22, 2020 that despite the report’s revelations, the sugar report did not touch upon one important aspect that is innately tied to the industry as a whole: water.
In the 347-page report, there are only five mentions about water. No reference to water is more than a couple of sentences long, and only two details directly address the critical relationship between sugar and water (the other three references were agenda items in various governmental meetings).
The report revealed that during a meeting in 2017, the secretary of the Ministry of National Food Security and Research informed the Sugar Advisory Board that “due to water shortage we see [a] low production of sugarcane in upcoming crushing season.”
Sattar calls the secretary factually correct. Variances in seasonal water flow can lead to unpredictable crop yields. However, lost within this symbiotic understanding of sugar and water lies an inconvenient truth: the water insecurity we experience in Pakistan is partly the result of our misguided policies relating to sugar.
If we wanted to arrive closer to the reality of the sugar-water relationship, the statement above might have been phrased, “the production of sugarcane, in and of itself, could result in greater water insecurity,” he wrote.
The blog explains that Pakistan’s very real “water crisis” is not one of “absolute scarcity” – the belief that there is not enough water in Pakistan is simply wrong. Water experts estimate that the total annual freshwater in the Indus Basin fluctuates between roughly 140 to 270 million acre feet every year.
The United Nations Resolution 64/292 (2010) on the “Human Right to Water and Sanitation” states that a person’s daily requirement to satisfy basic needs (drinking, eating, bathing, cooking, etc) lies between 50 to 100 litres.
The estimates reveal that Pakistan’s domestic demand stands at 18 to 36 MAF of water, comfortably below the Basin’s total capacity.
In just one example, millions of people living around Karachi’s Gujjar Nullah, a 13-kilometre-long storm drain, have not received water in their taps for over a decade.
Balochistan, the country’s largest province, faces endemic drought conditions. Sattar wonders that despite this, somehow, sprinkler systems in water-guzzling golf courses never seem short of supply as they manicure the lawns.
He points out in his blog that the water crisis Pakistan faces is not of literal scarcity but one of inequitable distribution and accessibility. The consequences of which are faced by the most vulnerable segments of the country’s population.
Pakistan’s reliance on agriculture may be one of the most significant reasons of the water crisis, Sattar says.
According to the Pakistan National Water Policy (2018), the state allocates roughly 95% of its water to agriculture, leaving just 5% for industrial and domestic use.
In a country where the UN estimates that 40% of all yearly deaths are because of an insufficient supply of clean water, the distribution of water to agriculture as opposed to households is shocking, the blog states.
Sugar is one of the most water-intensive crops in the world. Pakistan is the 5th largest producer of refined sugar.
Sattar says that calls for restructuring the bloated agricultural sector are predominantly met with three overarching apprehensions: the impact on farmers’ livelihoods, the effect on Pakistan’s food security, and the ramifications of overhauling Pakistan’s most significant economic sector.
The blog first addresses concerns over farmer’s livelihoods. The sugar report corroborates the fact that large sugar mill owners use mechanized farming techniques that don’t require significant labour. Therefore, the burden of reform moving away from sugar will fall not on mill workers , but on the many small-scale farmers who cultivate sugarcane for their family’s sustenance.
Adequate state preparation will protect these vulnerable farmers.
A two-way approach might help mitigate the risk, Sattar proposes. First, deployment of cash transfers. The structure of Ehsaas Programme is a good example in this case. Such a system can mitigate the immediate, short-term losses of farmers moving away from cultivating sugar.
Another option is cash transfers, the blog suggested. The transfer along with land grants and voluntary training programs will help farmers grow other crops.
The second concern Sattar puts forward in the blog is the need to understand that sugar is not a vital component of Pakistan’s national food security.
The distinction between sugarcane and sugar is of utmost importance here.
The writer explains that crops such as wheat and rice directly contribute to the nation’s food security because of our dietary requirements.
Sugarcane is a critical component of food security – its high fibre content makes it a key component of people’s diets in the country. However, once sugarcane is processed into sugar at the mill, it becomes a cash crop (such as cotton).
Cash crops do not contribute to food security and are produced simply for money.
The government’s report focuses on sugar, the cash crop, instead of sugarcane, a vital diet ingredient, in its discussion. It has therefore, categorized sugar under the rubric of “food security”, missing the entire point. More importantly, it sidesteps the greater issue: the water crisis.
Third, we must seek to substitute our domestic sugar demand, the writer points out. According to the blog, Pakistan’s sugar demand currently stands at 5.2 million tons (annual), requiring an estimated seven to 10 trillion litres of water.
Sattar suggests that by importing sugar from water-rich countries, such as Thailand, Brazil and India, our water woes will be relieved.
With these reforms, a natural pushback from conventional sugar mill owners benefitting from pre-existing policies is expected.
Sattar calls this a classic chicken-and-egg problem. He said that pushing sugar reforms through the door will require an incentive structure that will enable buy-in from the powerful vested interests that manifest themselves within our political class.
The Supreme Court has issued judgments against opening new sugar mills in Pakistan. This is a positive development but must be taken further, the blog states.
A governmental-mandated proclamation giving sugar mills a time period (say, by the end of 2022) to halt production and make alternative arrangements for the land and factories is the need of the hour, Sattar says.
Such a move must be supported by economic disincentives. The sugar report recommends that unfair subsidies to the sugar sector must end. This is a welcome recommendation but should be implemented through pricing water used in sugar production. If the cost of producing sugar makes the good unprofitable, then it will not make economic sense for sugar barons to cultivate the water-intensive crop.
In our water-scarce country, the story of the sugar industry’s growth and expansion, and the subsidy managed for its market and export disposal, reflects horrifically misguided state priorities that burdens water-quenched Pakistanis, Sattar points out.
He suggests that until holistic discussions that include “out-of-sight” factors such as pitfalls in our water sector (and hydrology more broadly) befall concurrently with political and economic strategy, we will not get very far in understanding the structural causes of Pakistan’s existential water crisis and how to resolve them.