Money Matters

Insufficient regulation

Money Matters
By M Shahid
Mon, 02, 21

There has been plenty of debate and no real action in the sugar crisis. Although, the report that was released by the government highlighted many issues including supply, production, and demand, not much has been done to regulate the sector and make it into a level playing field for farmers, sugar mill owners, and other stakeholders, so that the consumer can benefit with prices that are in line not only with international prices but also document all stages of the sugar sector.

There has been plenty of debate and no real action in the sugar crisis. Although, the report that was released by the government highlighted many issues including supply, production, and demand, not much has been done to regulate the sector and make it into a level playing field for farmers, sugar mill owners, and other stakeholders, so that the consumer can benefit with prices that are in line not only with international prices but also document all stages of the sugar sector.

Presently, once the sugar mills sell their sugar there is no track of where the sugar is being traded or where it is stored. This multi layering can easily result in hoarding with no tracking. This is primarily due to the fact that sugar ends up being traded in Jodia Bazar in Karachi and Akbari Mandi in Lahore. The long chain of profiteering raises the retail prices of sugar. As is now known, this also encourages hoarding to create artificial shortages in the market.

A documented sugar market will reduce the price at retail and increase the profit of the sugar mill simultaneously. This can easily be done by regulating all buy and sell activity using the Pakistan Mercantile Exchange Limited. This documentation will result in easy tracking of buyers and sellers so that hoarding is eliminated and market manipulation will cease to a very large extent. The bonus will be this documentation system will enhance taxes for the government and lower prices for the consumers. The PMEX platform should be acceptable to all stakeholders as it is the only commodities exchange and the shareholding is by eminent institutions of Pakistan.

The government will be well advised to look into this possibility and take the big leap to end the controversies in the sugar sector resulting in lower prices of sugar for the Pakistani consumer.