The sugar cartel

The strong sugar inquiry commission report gave hope of a sure direction of action against exploitation of the national exchequer, the consumer and the sugarcane growers at the hands of sugar industrialists. The sugar cartel has dragged the matter in litigation, and litigation history in general and in such cases in particular is discouraging. It is good to know that instead of waiting for the court case result, the government has started work to reform the sugar policy to combat cartelization. In case the reforms revolve around the CCP or SECP, it may take time to work as these organizations are incapable of controlling cartels. These organizations work in a limited atmosphere of auditing and imposing routine nominal fines for violations here and there and where the fines are substantial, they are challenged for endless lawsuits.

As the sugar industry has flourished in a protected environment, natural and effective control against the cartel is to generate a healthy competition for it in the market. The government is likely to allow import by the private sector as it has done in case of wheat that may not work. As the sugar industry is capable of controlling the market in Pakistan, no private party may take the risk of importing in the face of availability of unknown sugar stocks with the existing mills. It is therefore suggested that the Utility Stores Corporation of Pakistan be allowed to import sugar and sell at the desirable price. As the USC has a limited number of stores in prominent towns, it should therefore sell sugar both to the end consumer as well as to the wholesale and retail dealers so that the commodity becomes reachable to every nook and corner of the country. This is a short-term solution to break the cartel. The policy in the long run shall educate industrialists either to live in natural competition or leave to give space to professional businessmen. In case the local industry cannot compete with imported sugar even in the long run, it means Pakistan is not suitable for the sugar business. The policy will gradually weed out the inefficient part of the industry in Pakistan allowing it (Pakistan) to use its resources for production of some suitable commodity like cotton or pulses etc.

Mohammad Nasir

Rawalpindi