In view of trade surpluses, the federal government has levied a duty on wheat and sugar imports to protect farmers and sugar millers. Such temporary measures may be called for in times of stress originating from both domestic and international surpluses, or from market volatility.

However, these ‘relief measures’ should serve as a breather without slackening national efforts to improve productivity and quality and making goods and services globally competitive price-wise. Quite often, this does not happen, perpetuating inefficiencies in the economy by the permanent embedding of subsidies and protectionist measures taken from time to time.

It can be argued that selective and temporary protectionism has picked up worldwide after the global financial turmoil of 2007-8 and the Great Recession that followed it. This has provided more sovereign space for national economic decision-making, as countries are focused on tackling domestic issues with shrinking global trade and business opportunities. Many states also tend to develop free trade within national frontiers, with restrictive international trade practices.

While such practices may appear to be a need for the argument for ‘infant industry’ moving to a higher stage of productivity and economic development, it cannot be denied that protectionism breeds inefficiencies and often leads to rent-seeking and predatory practices, which are now visible on a global scale.

In case of the 30pc duty on wheat import, it may be advocated that agricultural produce is heavily subsidised by both Europe and the US — the world’s most developed economy — even though only around 3pc of the American population is engaged in farming. This protects western farmers from cheaper imports from developing states and emerging markets.

The temporary ‘relief’ in adverse circumstances may seem to be inescapable, but it should not be converted into rent-seeking

However, this is not a good example to follow. Subsidies can only be justified in very adverse circumstances, where there is also a strong determination to promptly remove the crutches when they are not needed. There is a strong evidence that subsides linger on and often get entrenched in the system.

The import duty on sugar may not be as justifiable as that for wheat, because the sugar industry has failed to develop in the direction where sugar could be a byproduct rather the core product of millers.

Sugar, like textiles, is a traditional industry that tends to thrive in ways that may often said to be questionable, such as by not making prompt payments to cane growers. It’s clout with the government comes under criticism from growers, particularly when cane crushing is delayed, which delayssowing and impacts the output of other major crops.

The country’s agriculture suffers from low productivity. That is the core issue. It is also true that the unabated flow of resources from rural to urban areas denies farmers the earnings, savings and investment needed to modernise agriculture. As soon as the support price for wheat goes up, the suppliers of farm inputs increase the prices of their products which significantly denies the farmers the full benefits of the increase in support price.

The 20pc import duty on wheat will no doubt help farmers and so would exports of sugar (plus 30pc import duty on sugar imports). Such measures, repeated over time, have not helped improve farm or millers’ productivity, which is among the lowest in the world.

Latest reports show that the Economic Coordination Committee of the Cabinet has endorsed Rs32bn in cash assistance for growers to compensate them for the crash in prices of basmati rice. This one-off relief may help check any trend among farmers to reduce their area of cultivation in the next basmati season, as normally happens when the price of a crop drops sharply. Rice is an important export earner.

The temporary ‘relie’ in adverse circumstances may seem to be inescapable, but it should not be converted into rent-seeking. In these times, no economy can progress with crony capitalism, which has to be rooted out lock, stock and barrel to build a globally competitive national economy.

It is time to primarily focus on the domestic market, with the top priority on food processing and exports; a sector in which the country has immense national advantage and an area that has been long neglected owing to erroneous policies.

The current global economic situation has provided more space for sovereign economic decision-making, and the opportunity should be seized to build a self-reliant, sustainable and inclusive economy. Capitalism needs to be further democratised in an environment of surging self-determination between and within nations, and growing pluralism.

Published in Dawn, Economic & Business, November 24th, 2014