Institutional gaps in wheat/sugar controversy

There has been a lot of hoo-ha since reports by PM’s inquiry committee on wheat and sugar controversies were made public. Corruption allegations and the ensuing cabinet reshuffle has gripped the economics discourse. Even mainstream media has joined the bandwagon, where sugar has obviously made the most headlines. But some of the key questions still missing from the discourse revolve around policy and governance.

In the case of policy, some of the decade-old questions known well by the policy community haven’t been brought to fore for broader public debate. Questions surrounding poor crop yields; subsidies that elbow out private sector investments and create inefficiencies; and the monopolistic role of the government that creates distortions in smooth functioning of commodity markets.

Might one remind that this monopolistic role is not only true in the case of wheat; it also exists in the case of fruits and vegetables. For instance, in Punjab, the provincial government has a monopoly on the establishment of wholesale markets for primary produce, and a very limited number of licensed commission agents - arthis - deal in these mandis, leading to an inefficient market.

As much as these policy areas require a serious debate, equally significant is the governance side of the problem. Some of these issues hardly make it into top agenda, but they invariably limit both the state’s capacity to regulate, and the markets from functioning properly. For example, there are no scientific mechanisms for accurate crop assessment and no agreed upon reliable figures for crop damage. This is true in case of wheat - as noted by the inquiry report - as it is in the case of cotton. And by the way, it’s also true in the case of livestock, broadly speaking. (See also BR Research’s Falling livestock GDP, Jun 17, 2019; & ‘Data, not anecdotes, must drive Pakistan’, Jan 8, 2020)

Other concerns over governance are more box standard – the changing of four secretaries of Punjab’s food department in less than one year is one such example. High employee turnover at top management levels speaks well about government’s mismanagement, the nature of which is surprisingly not unique to Punjab Food department. Despite the promises of dream team, PTI has had a human resource curse across the board since the very start - the Board of Investment, FBR, finance and planning ministries, commerce and so forth. (Read also ‘Who does what’, Jan 30, 2020)

But other areas of governance warrant more attention than allegations of corruption pertaining to the inner workings of the system. For instance, why should poultry feed millers need permission to buy wheat for their feed; do we want a command and control economy in 2020? Or are there any standard operating procedures and protocols that dictate wheat procurement.

The inquiry committee blames provinces’ failure to procure wheat despite falling stock of strategic reserves. In some cases, it has also named individuals. But it has provided no legal basis that prove that strategic reserves and market stabilisation reserves must be kept at X percent of the annual production or Y million tonnes per annum. Should procurement only be the function of these reserves? What if the annual crop output is substantially low; must these reserves be kept at the same level as in the years of high crop output.

It appears that there are no well deliberated criteria to maintain these reserves, nor are there any legal stipulations. If failing to procure wheat is contrary to law, then bear in mind that Khyber Pakhtunkhwa failed to procure in the year before as well. An inquiry committee should have sat last year as well, and heads should have rolled.

The fact is, as has been repeatedly flagged in this space, the policy and implementation of food security in this country hinges on cooperation between federal and provincial governments and among provincial governments as well. Yet as the matter stands, the mechanisms and platforms for such coordination are inadequate, ill thought and lack legal backing. (Relevant read: ‘Understanding agriculture’s constitutional arrangement’, Jan 13, 2020)

These legal and institutional gaps don’t only exist in case of wheat where support price, target setting and achievement of procurement targets are some of the key aspects requiring inter-governmental coordination, but they also exist in case of dairy, meat, and even sugar as the inquiry committee’s report suggests.

Addressing these concerns of policy and governance requires more than just inquiry committees and task forces. It requires significant improvement in intergovernmental coordination as well as broader public debate. At the risk of cynicism, it is quite clear that the PTI government isn’t enthused about strengthening the cogs of federation. It is equally clear that mainstream media and the public can’t think beyond corruption, while think tanks and academia are happy with their urban bias. (Read also: ‘Leaving agriculture behind’, Mar 11, 2020)