When governments claim to choose consumers over farmers, they usually end up betraying both. The latest move by Islamabad proves the point: the state has just contracted sugar imports through TCP, two months before the local sugarcane harvest begins.
The issue is not whether sugar imports should be permitted. Of course they should, on commercial terms at parity with other raw materials. The issue is whether the government should deploy its own resources to game a commodity market with the explicit objective of forcing down prices. That is not regulation. It is the state becoming a player.
Sugar prices had climbed by nearly 30 percent over the past eight months, far above general inflation, but still below landed import parity. No commercial trader imported because there was no margin. That meant local prices had room to rise before the new cane crop entered the market. Instead of letting supply and demand play out, the government jumped in with state-led imports to suppress prices.
The problem is not sugar alone. It is the reflex of the Pakistani state to treat markets as something to be managed rather than institutions to be trusted. Each intervention signals that price discovery is conditional on politics, and that signal is more corrosive than any short-term fluctuation.
Policymakers miss a simple truth: agriculture, like any other industry, runs on incentives. Farmers do not respond to sermons about national interest or cheap food. They respond to profitability. Distort prices today, and they respond tomorrow by cutting acreage, switching crops, or withholding investment. The result is persistent shortages and volatility.
Stability does not come from intervention. It comes from predictability. Producers and consumers can both live with high or low prices if they are transparent and credible, not ambushed by ad hoc state decisions. The absence of such predictability keeps Pakistan locked in cycles of scarcity and reaction rather than moving toward equilibrium.
There is also a deeper institutional cost. Each time the state positions itself as guarantor of cheap food, it digs the fiscal hole deeper and entrenches the expectation that government will absorb every shock. This erodes fiscal space, distorts credit allocation, and deters private investment in storage, logistics, and crop diversification. Why invest when rules can be rewritten overnight?
The immediate effect of TCP’s sugar import is that consumers get a reprieve. The longer-term consequence is that when cane growers haul their crop to mills two months from now, they will no longer be able to demand top dollar. Their incentives are blunted. Over time, they shift acreage away from sugarcane. Production lags demand, a structural deficit is baked into the system, and prices in future seasons end up permanently higher than they would under equilibrium.
This is the paradox of “choosing consumers.” The state lowers prices today only to guarantee higher, more volatile prices tomorrow. By undermining growers, it perpetuates scarcity. And in doing so, it betrays both the producer and the consumer it claims to protect.
Comments
Comments are closed for this article.