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No, this is no plea insisting how sugar industry has been wronged by the latest ban on exports. In fact, chances are – were they to be asked – the market players would happily acknowledge that this is a good decision at the right time.

Over the past five years, everyone and their grandmas have understood that Pakistan needs more export earnings, if it is to survive as a viable economy. Yet, also every time, a trickle of exports begins to drip in, the specter of rising prices is used to strong arm the decision makers to yield, ‘all in the greater public interest’.

But prices will not calm, because – for the lack of a better description – investors smell blood. Physical trading in non-perishable commodities is the second-best bet after hard cash dollars, and they are raking it in. Pakistan no longer has what economists term sound money, and milking exportable commodities is the safest flight to safety available to deployable capital. And unfortunately, in an economy facing a tailspin with no sense of direction, capital becomes color-blind: never mind, whether the channel is green, grey, or black.

So, penalize official exports, for all they care. Official exports weren’t quite the runaway success this time around, anyway. Out of a total of 15 million metric tons (MMT) sugar produced during last two seasons, 0.2 million metric tons (MMT) was officially exported; less than 1.5 percent. But all it did, however, was confirm quite explicitly, that there exists a substantive price arbitrage between domestic and international prices of sugar, which only gets worse by the day as the exchange rate continues its drive into the abyss.

How much of export revenue could then have been lost to smuggling? Quarter a billion dollars, or half a billion dollars – who knows? One would like to imagine that in a macroeconomic environment where a quarter of the population has already witnessed its purchasing power shrinking by a third in past five years, domestic demand would have been stagnant, if not altogether declined. Yet, somehow Pakistan witnessed multiple season of surplus output, yet there is apparently a shortage all over again.

What you can be sure of, however, is that unlike Iranian diesel, sugar and grains aren’t smuggled over bikes and two-wheelers. So, if another round of inquiry against the ‘evil’ sugar mafia is to be initiated, set one up for those manning the Customs check posts at our fenced border as well.

And, for the sugar industry, the less said the better. If there ever could be a case study of an industry so blindsided by itsown lack of vision, this would be it. Pakistan’s sugar industry is one of the most efficient in the world market, easily prepared to take on global competition. Yet, the sponsors’ vision is handicapped beyond the next election cycle, thus must generate cash to buy votes, than shoot for the stars.

Remember, this is a country where even ‘track and trace’ has failed to document a sector because the industry would rather sell to non-registered whole sellers and distributors on cash rather than make long term contracts with their B2B buyers, most of whom are large scale FMCG units. And, this is also the same country where producers would happily agree to higher-than-global-market raw material (cane) support prices, just so they can lock in their abnormal returns, rather than deal with the faintest hint of market competition.

So, from policymakers, producers, to the public, ‘you say you want exports’. But, if it cannot work out for the most basic commodity such as sugar – where Pakistan actually has a chance, it sure as heck won’t work out for value-added goods where we might actually have to slog it out. Not happening.

Comments

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Mubashir Munir Aug 31, 2023 09:59am
I request army chief to kindly take notice
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Taha Abbasi Aug 31, 2023 11:39am
Expensive sugar won't kill anyone imo. Pakistan already has one of the highest rates of diabetes in the world and they want o make sugar cheaper smh. Export it as much as unit economics allow and bring in dollars, that's what we need.
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Yousaf Hyat Aug 31, 2023 03:21pm
Free market is the only way out .
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Farhan Sep 01, 2023 09:31am
Free market is the best solution for every commodity but the benefit must be distributed among all stake holders. Why the farmers who make up 60% of total population are mugged? The rate of sugar in Pakistan is low because input which is sugarcane is bought @ PKR 250/40 Kg, bower the same is @ PKR 2400/40 Kg in Brazil. Point is if that price is paid to farmer than even you rise the price the affordability will remain. But if only the mafia reaps all the benefits which is 0.0001% and 99% remain starving people are just to object the export and domestic prices will keep rising. Slogans might not be right but protest is right.
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HashBrown® Sep 01, 2023 06:29pm
@Taha Abbasi, Although I agree with you in principle, sadly the reality is more bleak. Commodities such as sugar and tobacco are consumed primarily by the working class, and are some of the few meagre luxuries they have in an otherwise miserable existence. Jacking the prices up won't push them into a healthier lifestyle (as if the sugar barons really care about that), it will just push them even deeper into debt. And it is from this despair that all our other curses, ie corruption, terrorism etc emerge...
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