Wheat, sugar ‘cartelisation’

There is a storm brewing and few of us are prepared for it. No, this does not refer to the new weather system that is storming us from the east, but one which has been forming within the country for a while. This refers to the hikes in prices of wheat flour and sugar — by 10% to 26% — as pointed out by the Competition Commission of Pakistan (CCP). The National Assembly Standing Committee on Finance has been informed of the ‘unjustified’ increases in the prices of the two commodities. To make it worse, the federal cabinet’s Economic Coordination Committee (ECC) had failed to take adequate corrective measures. In part, it was led by an allegedly misleading report presented to the ECC claiming that the prices of wheat and wheat flour had fallen by 0.03% and 0.69% respectively.

This was, however, in stark contrast to the ground realities reported by the CCP which presented its report to the NA panel the same day. The CCP said the price of sugar has gone up by 25.8% amid a five-year high in inflation. The most shocking aspect of the sugar price rise is that there is currently an oversupply of the commodity as compared to its demand. The flour mills were allegedly involved in fixing prices of flour, sharing critical strategic data on flour prices apparently violating CCP laws. Here too, the CCP said the flour price had increased by 10% as compared to the reduction reported to the ECC.

The word the CCP used to describe the anomalous behaviour of mill owners was ‘cartelisation’. What is more worrying is that at least at some level, the government is being misled into a trap to release billions of rupees of subsidy for the products. This is one of the rare times that we have had an ‘early warning’ on this gathering storm. With the masses still waiting for the promised change to happen, the government must take effective steps to break up the cartels and not allow itself to be blackmailed.

Published in The Express Tribune, August 11^th, 2019.

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