Sugar daddies

The ‘inquiry committee to probe the increase in sugar prices’ has three things in it. One, the amount of the subsidy. Two, the names of beneficiaries. Three, the impact of sugar exports on domestic price. It’s indeed a fine report, well written and well analyzed. Will the report be used by decision-makers to benefit 220 million Pakistanis? I doubt it.

Fact 1: We consume around 25 kg of sugar on a per capita basis. Fact 2: Over the past seven years, domestic price of sugar has been higher than the international price. Fact 3: Over the past seven years, sugar consumers in Pakistan have over paid a wholesome Rs305 billion. Fact 4: Over the past four years, Rs25 billion has been paid as ‘subsidy’ to sugar mill owners.

What really is a subsidy? You and I pay taxes which fill the government treasury. The government took Rs25 billion out of the treasury and gave it to sugar mill owners. In essence, Pakistani taxpayers provided subsidized sugar to the citizens of the importing country. Lo and behold, poor Pakistanis provided cheap sugar to the citizens of rich countries (was sugar exported only on paper to earn billions?).

To receive a subsidy is not against the law but fixing prices is a violation of competition laws. The entire sugar industry is a political industry. The government decides who can own a sugar mill. The government decides the support price of sugarcane. The government restricts the movement of sugarcane. The government decides on subsidies. The government of a water-stressed country gives a multi-billion rupee water subsidy.

Fact: Wherever there’s government, there’s fraud (whether wheat, sugar or electricity). Wherever there’s government, there are shortages (whether wheat or sugar). Wherever there’s government there are price hikes (whether wheat, sugar or electricity). Wherever there’s government, there’s transference of wealth from the poor to the rich (whether wheat, sugar or electricity).

Remember, Robin Hood who used to steal from the rich and distribute it among the poor? Our government is a classic Robin Hood in reverse – the government takes from the poor and gives the same to the rich. Here’s the current business model: politicians, bureaucrats and businessmen team up to ‘raid’ the treasury. This is classic state capture – the “domination of policymaking by private, often corporate power.”

Take the government out of the sugar sector – and the shortages will end. Take the government out of the sugar sector – and the price hikes will end. Take the government out of the sugar sector – and the transference of wealth from the poor to the rich will end. Take the government out of the sugar sector – and Pakistanis will begin to get the cheapest sugar on the face of the planet.

To be certain, the price hike is a symptom. The disease is the government. Our government is merely trying to suppress the symptom, not cure the disease. To be sure, curing the disease is really quite simple: PM Imran Khan completely withdraws the government from the sugar sector. That’s it, as simple as that.

Let the sugar mill owners export as much sugar as they want (no subsidy). Let the private sector import as much sugar as they want (no import duty). Result 1: There will never be any shortage. Result 2: Pakistanis will get the cheapest sugar in the world.

Will the PM do it? On the one side are our five-dozen sugar daddies. On the other side are the 220 million Pakistanis. Sugar daddies are organized – 220 million are not.

The writer is a columnist based in Islamabad.

Email: farrukh15@hotmail.com Twitter: @saleemfarrukh