SUGAR prices are a major political economy issue in Pakistan. Any small or large upward change in domestic sugar prices tends to trigger much noise in the media, with the government activating its administrative machinery to launch a ‘crackdown’ against sugar mill owners and traders to bring down retail rates.
Sometimes the judiciary also intervenes because of the massive public attention sugar prices draw, thanks to the political profile of most mill owners.
A ‘probe’ is ordered, lengthy reports are prepared and recommendations formulated to ‘reform’ the sugar trade and keep prices in check. But nothing really changes.
The reason for the recurring ‘sugar price crises’ is well known: the government’s involvement in the sugar economy to protect politically powerful large cane growers and factory owners.
The solution is also obvious: withdrawal of the government from the market, and removal of restrictions on free import and export of the sweetener to let demand-and-supply forces take their own course.
However, no government — civil or military — has shown enough political will to implement the solution for fear of losing the support of large growers and wealthy millers. Hence, both farmers and factory owners remain deeply invested in this crop because of guaranteed, risk-free profits.
It was, then, not surprising when the discourse over sugar’s rising cost gained momentum recently. Many accused the previous PDM government of allowing the export of ‘surplus stocks’ lying with mill owners earlier this year, blaming it for the current price spike.
Others held sugar’s unchecked smuggling to Afghanistan, due to the large gap between the domestic and international prices of the commodity, responsible.
Punjab’s caretaker government has blamed the price surge on an interim Lahore High Court order that stopped it from monitoring the commodity’s supply chain to ensure implementation of the notified price of Rs100 per kilo.
Interestingly, the caretaker administration has done nothing to get the interim order, that was passed in May, vacated, despite consistently rising retail prices and awareness of sugar smuggling to Afghanistan via Balochistan. The administration’s report on the matter, presented to the Punjab chief minister recently, is self-incriminating at best.
Past experience shows that the issue will fade away in the next few days or weeks. The retail rate will also come down to settle at a level matching the increased official support price for the next harvest. Sugar forms only a small portion of household expenses.
If the government wants to stabilise the market it should extricate itself from the supply chain. It is incorrect to say that the price of sugar can aggravate or mitigate economic shocks in poor or middle-income families.
If the authorities want to help these families, they should focus on reducing the overall cost of living for them — and not just that of sugar.
Published in Dawn, September 7th, 2023
