Beneath wheat and sugar crises

Published November 9, 2020
— File photo
— File photo

Wheat and sugar crises take a heavy toll on Pakistan’s politics. Politicians know this. But they fail to make policies that can prevent frequent occurrence of the crises.

The PTI government claims it is restructuring the policies governing wheat and sugar sectors. It hopes that restructured policies — with a focus on accurate data gathering and sharing, stronger market vigilance to check cartelisation and hoarding and heavier penalties on violations of relevant rules and regulations — will stop the recurring wheat and sugar crises.

But unless all political parties reach a consensus on upholding the 18th amendment that has placed agriculture and other concurrent subjects under complete provincial control, no amount of policy changes will work.

The PTI ruling the centre has been trying to rewrite the 18th amendment and is fully supported in this regard by the powerful establishment. Major opposition parties, particularly the PPP ruling in Sindh, wants to retain it in its current form.

Besides, there is a general lack of trust between the federal and Sindh governments over the framing of agricultural policies and their execution. Unless both resolve to develop a trust-based working relationship, nothing can stop the repeat of wheat and sugar crises. Avoiding these crises in the future also seems difficult given the prevailing political polarisation in the country.

The cultivation of politically sensitive sugar cane and wheat crops has long remained in the hands of powerful landlords

The federation and the provinces can still initiate an exercise for preventing wheat and sugar crises if they agree on revamping wheat and sugar sectors keeping economic facts in mind and setting political interests aside. That, too, is obviously not easy in a fragile democracy, dependent on political dynasties and the establishment, wherein both provincial and federal institutions cry for real independence and lack efficiency, transparency and accountability.

Wheat, wheat flour and sugar crises hit several times during Zardari and Nawaz eras, too. But what makes them more painful in the PTI’s maiden government is that these crises have hit people three times in less than three years. The PPP and the PML-N, too, would hold each other responsible for wheat and sugar crises. But both knew how to overcome them. The PTI apparently lacks this ability. Even if the PTI government now succeeds in bringing wheat flour and sugar prices down — and government officials say it will — the damage done this time has been enormous. Retail prices of both wheat flour and sugar have almost doubled during the PTI rule of less than two and a half years.

Besides, the PTI’s failure to take all provinces on board regarding agricultural policy setting — and the non-cooperative attitude of the PPP that rules in Sindh — have brought things to a pass where avoiding a frequent recurrence of commodity crises has become a Herculean task.

The federal government’s role in allowing imports or exports of wheat and sugar has become challenging after the devolution of agriculture as a provincial subject since 2010-11. Timely decision-making now depends largely on the timely sharing of accurate and precise information by the provinces regarding a surplus or shortage. Unwillingness of the provinces to allow physical verification of stocks and bureaucratic delays — both at provincial and federal levels — also affect strategic decisions and dilute their intended results.

The seeds of wheat or sugar crisis are sown at the time of estimating the last year’s crop and available surplus or the extent of shortage and projecting the next year’s crop. At each step, mistrust and lack of harmony between provincial and federal authorities create lots of confusion. As a result, decisions taken in the absence of accurate statistics affect market behaviour.

All the three sugar crises that have so far jolted markets in less than three years could have been avoided. Only one such crisis hit markets amidst a fall in the sugar cane output in the last Kharif season, affecting sugar production. The sugar cane production was enough when the first sugar crisis hit during the PTI government and it is still enough when markets are witnessing the third consecutive crisis. These crises occurred chiefly because some powerful people both in and outside the government influenced decision-making in Islamabad and triggered non-cooperative attitude in the provinces.

Similarly, all the three wheat flour crises that gave the nation a headache in less than three years were only partly due to a decline in the wheat output. The federal government’s failure to preserve strategic wheat reserves in hygienic conditions, Sindh’s failure in preventing theft and smuggling of provincial reserves and Punjab’s inept coordination with the smaller provinces were as much to be blamed for these crises as anything else.

The cultivation of politically sensitive sugar cane and wheat crops has long remained — and still is directly or indirectly — in the hands of politically powerful big landlords. Over the years, greedy elements of the powerful establishment have also developed relations with them. That is why key decisions like allocating the area under cultivation of these crops, projecting their output, fixing the minimum support price, offering subsidies on inputs and promoting good farming practices to enhance productivity are overly influenced by the peculiar needs of the powerful landed gentry, and not by pure economics.

There are less than 50 sugar mills. They are all in large-scale manufacturing and their affairs are “managed” easily by top politicians sitting in provincial or federal power corridors. The number of flour mills and chakki walas (micro flour mills) runs into thousands and almost all of them are in the category small and medium enterprises. Provincial food departments at the behest of political bosses “manage” them through the system of official procurement of wheat and provision of subsidy to flour millers and micro flour millers. It is this involvement of the powerful people that deprives small farmers of the real benefit of the officially fixed reasonable market price for the wheat they produce. And it is because of their involvement that heavy subsidies offered to flour mills via supply of wheat on below-market prices are never passed on to the end consumers in the form of low-priced wheat flour.

Published in Dawn, The Business and Finance Weekly, November 9th, 2020

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