The lack of global solidarity witnessed during the pandemic is another trend

likely to persist in many areas this year. Despite assertions by the world’s big
powers to strengthen multilateralism and international cooperation, the
reality has been different with competition rather than collaboration being the
dominant dynamic. Countries’ preoccupation with domestic problems will also
weaken global cooperation. The annual Strategic Survey by the London-based
International Institute of Strategic Studies identifies “the cooperation gap in
various key areas” as a top trend which is already evident. But it also cites
some “cooperation successes” including the new START treaty and COP26 (on
climate change). The larger picture, however, is of dynamics driving greater
division in the world. In similar vein, the Financial Times in a recent editorial
described “serious failings of international coordination and cooperation” as a
danger in the context of the pandemic. But this is also more widely applicable
to a world where the key strategic driver of events is tensions between big
powers. Far from abating these have intensified — a trend also expected to
assert itself in the year ahead. East-West tensions will continue to contribute
to an increasingly fragmented international system.

PAKISTAN’S economic direction including its agriculture and food

policy is characterised by contradictions which could not be more
stark than its sugar policy. Sugar is an important part of the
household diet in Pakistan but is not consumed more than rice,
both in terms of volume and value. Paradoxically, rice is liberally
exported and is without price control whereas sugar is subject to
various price controls and other administrative machinations. It is
a classic case of a conspiracy against the consumers.

Read more: Bitter sweet facts

It would be helpful to understand the sugar business value chain in Pakistan

and identify the actors and players conspiring against the consumers who are
forced to buy expensive local sugar when it is significantly cheaper in the
international market. The sugar cane crop which is the raw material for sugar
as a finished product, is cultivated on 2.1 million acres of land in Pakistan,
mostly in Punjab and Sindh. Later, sugar is extracted from the crop in 81 sugar
mills, again mostly in Punjab and Sindh. These mills are the processing units
where farmers and middlemen/contractors sell the sugar cane crop through a
highly interventionist method devised by bureaucrats which in the end
satisfies no one in the value chain. A tiny portion of the crop is also processed
on the farms and gur is produced which is consumed mostly in Khyber
Pakhtunkhwa and exported to Afghanistan.

Sugar cane cultivation and sugar manufacture represent the ‘worst of both
worlds’. The price of sugar cane is administratively fixed by the government
and the finished product ie sugar is supposedly sold at the ‘market rate’ to
wholesale dealers and ultimately to consumers (both households and
industries). It is akin to the government ordering a tailor to buy fabric at the
price set by the government and sell his finished garment at the market rate!
This cannot work and creates significant distortions in the value chain. Very
few people in Pakistan are aware that this illogical system of the sugar sector
value chain is sustained through a 40 per cent duty on the import of sugar in
Pakistan and ultimately it is the poor consumers who bear the brunt of the
madness of the sugar policy.

It would be a valid question to ask what justifies government intervention or

market rigging for a food commodity such as sugar which has far less value
when compared to another food commodity like rice. It is important to know
that more than half of the sugar is used in commercial businesses including
sweets, biscuits and soft drinks where it functions as an intermediate
commodity rather than being consumed by an individual and supposedly a
poor household.

Sugar cane cultivation and sugar manufacture represent the ‘worst of both
worlds’.

The list of government ‘distortions’ in the sugar sector is long and starts with
the issuance of or application for the licence of a sugar mill. It is the
government that decides where a sugar mill can or cannot be installed. The
government also decides when sugar mills can start the crushing season (in
other words when the tailor master will open his shop) and when mills have to
make payments to their raw material suppliers for a business which is
supposed to be free and liberal in nature in which private parties are supposed
to make deals on their own without government intervention. It would not be
out of place to ask what justifies government meddling in the sugar sector
when invariably every household spends more on rice than sugar.

Sugar cane is a long-gestation crop and takes from 14 to 18 months and is

known as a water guzzler requiring a huge quantity of precious irrigation
water for maturing. This 14- to 18-month crop period makes sugar cane
unsuitable for small growers and only medium- and large-scale farmers
cultivate this crop. The dual aberration, that is the lower consumption
importance and lower equitability value for the sugar cane crop on the
production side (and a large environmental impact in terms of water
requirement), makes government intervention even more bizarre. Why does
the government intervene and take upon itself the wrath of all stakeholders as
it is impossible to satisfy conflicting expectations of the players in the value
chain?

To understand the sugar sector mess, it is important to bring into the picture
the current sugar mill owners who are also large-scale sugar cane farmers.
This is different from the 1960s or the early 1970s when mill owners were
mostly industrialists who had little interest in farming and the mill owners
hardly had any electoral clout. This sugar mill ownership landscape changed
in the 1980s and large-scale farmers, as a form of state patronage (and with
public-sector bank financing) got sugar mill licences and entered the business.
The rise of these large-scale farmers as mill owners consolidated vested
interests. The worst form of this vested interest manifested itself last year
when millers were provided large-scale export subsidy and the same year the
commodity was