Sugar cartels and corruption

By Taha Kehar

There is a growing consensus that the ongoing sugar crisis could inevitably lead to a crisis of hegemony in Pakistan. Poverty reduction appears to have taken a backseat to the constant profiteering that the PPP-led government is quite brazenly engaging itself in. This has become even more conspicuous after the Competition Commission of Pakistan (CCP) has indicated that sugar barons in the sugar industry are swindling consumers by the use of an unfair scheme of cartelisation.

The report presented by the CCP suggests that despite the fact that a sufficient quantity of sugar is available, it is still being sold at a price that is substantially in excess of its production cost. These findings have been re-affirmed by the Information Minister, Mr. Qamar Zamar Kaira, who has recently held the Punjab Government accountable for spearheading the sugar crisis.

Although a stay order attained from the Lahore High Court by the Pakistan Sugar Mills Association (PSMA) has prevented the CCP’s report from being made public, its legitimacy cannot be disputed with ease. Hence, the likelihood of a mounting trust deficit between the consumers and the millers is strong. What is equally puzzling to note is that over 90% of sugar mills are owned by parliamentarians who are primarily in a position to repeal, amend and pass legislations.

This, by implication, proves how the elements within the government are ardently involved in boosting their own profits rather than addressing the multifaceted problems in Pakistan as honest mediators. More significantly, it highlights the extent to which the downtrodden sections of society are and – unless these unwarranted cartels are not suppressed – will continue to suffer at the hands of those who are repeatedly nominated to represent and further their interests.

Under these tragic circumstances, it is essential to address the crux of the problem of cartelisation in the sugar industry (i.e. the ever-present issue of corruption). It is only then that the nation’s dwindling confidence in the government will be revived and the herculean task of poverty reduction can be tackled.

First, it is important to note that cartels which akin to collusive enterprises that could potentially weaken the consumer-focused attitude that is central for the survival of producers in the market.
Second, it has to be understood that cartelisation in the market for goods that are considered bare essentials is a form of corruption which can be rectified through economic liberalization. This entails a transparent process of deregulation which will consequently reduce the part played by the sugar barons cum parliamentarians in resource allocation. One may dispute that this could be a highly difficult venture in a country dense with a history of corruption. But, it is integral that for any form of deregulation to break the yoke of these cartels, adjustments have to be made within the legal framework as well. In that case, cartelisation – especially in the market for essential items such as sugar – needs to be declared a federal crime.

It is only then that the problems associated with the sugar crisis will be tackled responsibly.

2 Comments

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2 responses to “Sugar cartels and corruption

  1. There is no doubt that sugar cartel is Punjab based, mostly Sharifs and Chaudhurys. They did not uplift their quota of sugar lying with TCP, that they could not have been sold for more than Rs.72/Kilo, until their mills sugar were sold from Rs.106 to 120/Kilo, fetching a fortune for them at the altar of comman man.

  2. T.S. Bokhari

    I wonder why there is so hulaballu about the sugar (a luxury article) cartel, but no protest against the international oil exporters’ cartel which is the cause of all the economic ills of the under-developed oil importing countries.