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Pakistan Police Attack Peaceful Sugar Workers Protest; Profiteering Amid Factory Closures and Layoffs
Photo source: Dawn, 12 May 2006
At a time when sugar prices have reached record levels in Pakistan a group of unemployed sugar mill workers and their families have been attacked by police at a peaceful demonstration in Karachi on 11 May. The workers were protesting against the failure of the Sindh provincial government to implement an agreement reached in September 2005 following the closure of the Dadu and Thatta sugar mills owned by the Sindh Sugar Corporation, a state enterprise.

The mills were closed in the 1990s, destroying the jobs of 2,400 workers and the livelihoods of their families. It was estimated that at the Dadu mill alone a further 4,000 workers earned their living through the loading of sugar cane and 20,000 families were in various ways (cane farming, transport etc.) dependent on the mill (The Nation, 2 May 2006).

The closure of the mills was on the surface the result of huge financial losses, but it is reported that the root causes of these losses were significant and endemic levels of corruption. There is evidence pointing to mill managers and state bureaucrats using mill funds to loan money to local landlords and to selling sugar at below market prices to favoured traders and skimming the difference (The Nation, 2 May 2006).

PSMWF President Gul Rehman addressing a rally of the Dadu and Thatta Sugar Mill workers, September 2005.
Following the closure of the mills, the workers and their unions, members of the IUF-affiliated Pakistan Sugar Mill Workers' Federation (PSMWF), initiated a series of campaigns and protests to secure proper compensation and alternative employment. Finally in September of 2005 representatives of the two unions reached an agreement with the Chief Minister of Sindh province which would provide compensation payments to workers over 50 and new jobs for those under 50. The peaceful protest in Karachi on 11 May was designed to highlight the government's eight-month failure to implement the agreement. Following the assault by police the IUF wrote to the Chief Minister protesting the police actions and calling for the implementation of the agreement.

The problems faced by the workers of the Dadu and Thatta mills exemplify the reality of Pakistan's sugar sector which is beset with gross mismanagement, corruption, hoarding, profiteering and tax evasion. The consequences of this are not only the loss of jobs and union busting (see related stories below) but also people in Pakistan suffer from enormously high costs for a basic good vital for daily life.

Despite a very high per capita sugar consumption rate in Pakistan and huge production, Pakistanis pay roughly the same price for sugar as people in Australia, yet the average income of a Pakistani is around one-tenth that of an Australian.

Of Pakistan's 78 sugar mills, 20 mills were recently classified as in crisis. These mills are owned by government ministers and those close to the government, all of which have failed to release their full production into the local market, thus inflating prices.

According to comments before the Public Accounts Committee, the average final cost for purified sugar is around Rs21-22/kg (US$0.35/kg) and is selling in the local market for Rs42/kg (US$0.70/kg). However, mill owners have only been paying sales tax at the rate of Rs29/kg (US$0.48/kg), thus avoiding tax on approximately Rs13/kg (US$0.22/kg). While there is no complete figure on total tax evasion, a number of cases already under investigation show tax evasion by sugar millers in the amount of Rs326 million (US$5.5 million) (Dawn 11 May 2006).

The reality of the sugar sector in Pakistan is that it is owned and controlled by unaccountable elites. These elites draw their power from control over state bureacracies, the army, concentrated land holdings and market domination. Such a configuration will never deliver decent jobs, democratic rights and livelihoods to people.

Related Stories
Management Orders Mill Union to Dissolve the Day After Joining National Sugar Industry Federation [2003.05.27]
Ending Fragmentation and Confronting Restructuring - Pakistan's First National Sugar Workers' Federation Emerges [2003.05.22]
Union Busting in Pakistan’s Sugar Mills: Workers Face Dismissal and Illegal Detention [2001.10.29]