When price of both sugar and flour spiral out of control, the king can no longer tell his subjects to eat cake instead of bread. Thus, a mere five percent rise in retail price of sugar (over preceding six-month average) has caused a serious public outrage, especially as it has coincided with shortfall in wheat availability.
Why does a rise in price of sugar charge such passions? No doubt, price increase since last year – at 32 percent – is substantive, but by no means is it the highest within the CPI basket. In fact, price levels of most kitchen items have recorded double digit jumps since January 2019. Of note within this list is chicken (42 percent), pulses (55 percent), and staple vegetables such as potatoes, onions, tomatoes, and garlic – all rising by over 50 percent on average.
It will be elitist to argue that sugar is not a part of staple diet; or even excluded from the list of essential nutrients. While the more refined from the mid- and upper tier income levels may frown upon the scourge of diabetes, for a vast majority of country’s manual labour – toiling daily under excruciating conditions – an early morning cup of tea filled with three spoonful of sugar is as good as any caloric packed energy drink.
Thus, until such time that the long race of ensuring nutritional security of Pakistan’s ‘malnourished-millions’ is won, affordability of basic food commodities such as ghee, flour and sugar will continue to lie heavy – vile as they may be to the tastes of ‘nutritionally woke’ amidst us.
But what makes sugar unique is that it may be the only essential commodity which – when inflicted with an inflationary spiral – elicits allegations of profiteering and corruption – a pitch tad higher than the cliched assertions of incompetence and poor governance that is now the hallmark of every 9 o clock news bulletin.
Are the supply-side causes of sugar price variability not well understood? Crop has fallen short, raw material price has increased, and carryover inventory has been exported to reap benefit of international price resurgence – reasons explained in this space ad nauseum.
The distaste expressed in public imagination is also no mystery. Afterall, the industry probably has the most well-known – if also not the most overwhelming – political footprint in its ownership. But is it surprising that industry sponsors – whether politically affiliated – benefit when the price of their products rise? More importantly, does it justify the name calling?
When exactly does an entrepreneur - taking advantage of market timing for profit maximization – crosses over into the realm of ‘profiteer’ or ‘baron’ is a discussion more appropriate for a journal of moral philosophy. And while the industry may be factually correct in insisting that it is has not engaged in causing ‘artificial shortage’, the loathing expressed by public must be appreciated. And here is why.
As degraded as the profession of politics may be in this country, those affiliated with it – as elected representatives or functionaries of political parties – are entrusted with the station of protecting the public interest. The fact that public interest – in this case, affordability of a kitchen essential – may be sacrificed at the alter of private profit maximization is a clear ethical dilemma, even if not a legal one.
This is not a call for knee-jerk administrative response for price control or raiding of production facilities. Far be from it. But for the industry to introspect. And while the ‘non-aligned’, apolitical firms may insist that they are painted with the same brush at the expense of a select few, it will not be wrong to point out that nearly all of them are equal opportunity beneficiaries when the most influential amongst them extract favourable policies from governments in power.
The maligning of industry is often uncalled for, whether concerning its misunderstood water footprint (it’s a full year crop), poorly quantified value-addition (ethanol has a lucrative export-oriented potential), or even surplus production (trade is overly regulated). But it is only natural; in a 24-hour news cycle, media everywhere is short-termist – going after the headline and ignoring the context.
And while the sector may have a fair potential to become Pakistan’s third-largest export-oriented industry, it will continue to be seen as the basket case of all that is wrong with country’s political economy. Not unless the industry association steps up and takes on the challenge head-on.
There is wide acknowledgement among sector’s stakeholders that its problems are deeply structural in nature. From a price guarantee that creates perverse incentives for over-production of raw material, to criminal liability in case a mill halts crushing without express permission of cane commissioner – a bureaucratic office that harkens back to colonial times. An import duty that stifles competitiveness, to restrictive export that limits ability to take advantage of surpluses at the time of favourable price movement.
If the industry truly means to shed its rent seeking image, it will have to demand for the removal of archaic over-regulation that plagues it. Retail sugar is no longer rationed, and consumer welfare generally improves when markets are more competitive. Afterall, the poorest of poor are said to survive on daal roti, yet no one bats an eye when price of (mostly imported) pulses spiral as a result of currency depreciation.
Until the industry association takes charge and lobbies for regulatory reform, flashy headlines of ‘shortfall’, ‘price spiral’, and ‘subsidy’ will continue to dominate the news cycle. While it may not warrant presumption of guilt, it may justify suspicions of indifference.