The rise of the sugar oligarchy - Insaf Blog | Pakistan Tehreek-e-Insaf
The rise of the sugar oligarchy -Insaf Blog


The first time people of Indian subcontinent tasted processed sugar was in the latter half of the 19th century after the British established the first sugar mill on Indian soil in Madras in 1868. From then onwards the sugar industry in India remained firmly in the hands of the powerful oligarchs of Madras, Bombay and Calcutta. 

During the early years of independence there was a serious dearth of industry and economic activity in the newly formed Pakistan with the country inheriting only two sugar mills -- one in Rahwali, Gunjranwala and the other in Takhbai, Mardan -- which are estimated to have had a combined crushing capacity of 1000 metric tonns.

All of this however changed in 1959 when the government in a bid to boost the private sector tasked the Pakistan Industrial Development Corperation (PIDC) -- under the leadership of Nawab of Kalabagh -- to set up industrial units including sugar mills across the country. These mills were then handed over to some of the prominent business families of those times on favourable terms.

During the millitary regime of Ayub Khan the sugar industry experienced a marked increase in private investment which led to it expanding exponentially. This was in part due to the government's preferentional treatment of the major sugar mill owners. However, in 1968 the rise in the price of sugar (to the tune of 25 paisas) prompted anti regime riots and eventually led to the ouster of President Ayub.

When Zulfqar Ali Bhutto came into power and the Pakistan Peoples Party government's nationailsation drive engulfed all sectors of the economy, the sugar industry remained largely untouched and no attempts to nationalise privately owned mills were made by the government. Furthermore, the government during this time tasked the provincial industrial develpment boards to establish and operate sugar mills in their respective provinces.

This policy along with all of the previous government's nationalisation measures was overturned by General Zia ul Haq regime and the sugar mills being operated by the provincial industrial boards were privatised. 

During this time, privatisation was given free reign on the economic front while nepotism ruled the roost in the political sphere. Those who had been disenchanted by the anti-business attitude of the PPP found allies in the business friendly millitary regime. Among the many families affected by Bhutto's onslaught on private enterpise was the Sharif family which by 1985 had bribed its way into making its scion, Nawaz Sharif the chief minsiter of Punjab.

Nawaz Sharif's stint as chief minister from 1985 to 1990 saw the rapid expansion of his family's business and fortune. Busniessmen and politicians alike did whatever they could to curry favour with the province's ruling family. 
It was during this era of unbridled corruption that the sugar mafia as we know it today truly emerged. The provincial government under Sharif only granted licences to set up sugar mills to those who were willing to puchase the plant and machinery from Sharif's Ittefaq Founderies -- the cost of which was estimated to be around Rs400 million which amounted to the total cost of establishing a sugar mill in that period to around Rs600 million which had shot up from Rs150 million in the Bhtto era.

As a result, the sugar industry in Punjab came to be dominated largely by Sharif's business and political allies, many of whom became members of the Pakistan Muslim League (N) and went to hold crucial portflios in subsequent governments througout the decade.
The sugar oligarchs empowered by the PML (N) found new impetus in the 2000's when they benefitted greatly from the neo-liberal and anti regulation policies of the new government. During this time the cartelisation of sugar mills began wherein the mill owners --  a large number of whom had shifted their allegiance over to the ruling Pakistan Muslim League (Q) -- were allowed to install additional units which enabled them to increase their production from an average of 3000 tonns to 12000 tonns.
In Sindh, on the other hand, the post Bhutto-PPP-led government (2008 - onwards) had pressurised private mill owners into allowing then president Asif Ali Zaradri to monopolise his hold over the province's sugar industry. As a result of which a majority of the sugar mills in Sindh are now owned by Zardari's Omni group, which along with Ramzan sugar mills of the Sharif group are among the most cruial members of the notorious sugar mafia.
There is no doubting the fact that sugar mafia which emerged during the past thirty years has held considerable sway over successive government from the 1990s uptil now; their mills account for over 60% of the entire sugar production in the country; they have undisputed control of the Sugar Mills Association; and they have occupied prominent postions of power in successive governments.

All of the above however changed in the early weeks of April, 2020 when the federal government under the directions of Prime Minister Imran Khan made public the Federal Investigation Agency's report which implicated the sugar oligarchs -- including one of Prime Minister's most prominent political allies -- for creating an artificial shortage of sugar and selling it at inflated prices.

In spite of the fact that Khan's government much like all previous governments in the past two and a half decades has relied on the power and influence of the sugar oligarchy, it is the first time in thirty years that a prime minister has been bold enough to take on this powerful mafia head on. 

The government's decison to release the FIA report and its order of an inquiry has undermined the opinions of those who claim that Pakistan Tehreek e Insaf's crackdown on corruption is limited to the opposition only.
However, the fact remains that the sugar mafia in Pakistan is immensly powerful and any attempt by the government to regulate it will be met with stiff and unwavering opposition.