Sugar, power and patronage

ISLAMABAD:

Pakistan's recurring sugar crises have become a telling reflection of how entrenched elite interests continue to manipulate the economy under the guise of policy. The latest surge in sugar prices, now hitting between Rs180 and Rs210 per kilogramme despite official claims of intervention, shows just how far removed state actions are from public welfare. What is unfolding isn't simply mismanagement. It's a system that protects the powerful and punishes the public.

In July 2024, the federal government announced with much fanfare that it had reached an agreement with sugar mills to sell sugar to wholesalers at Rs165 per kg. This was framed as a breakthrough deal. But within days, the mills began violating the agreed price, resuming supply at Rs175, not Rs165. Even at inflated rates, sugar remains scarce in wholesale markets. The public, meanwhile, continues to pay well over Rs200 per kg in major cities like Karachi and Lahore. This was not just a policy failure. It was the illusion of reform – an orchestrated move to deflect public outrage without touching the roots of the problem. And at the root lies one uncomfortable fact: the sugar sector is not regulated by the government. It is effectively governed by itself.

The concentration of political and economic power is stark. The Sharif family, which sits at the core of the current ruling coalition, owns major sugar mills. That the same actors who draft economic policies also control production and pricing of sugar reveals a conflict of interests so blatant that it no longer shocks. This overlap turns policy into patronage, and governance into a tool for private gain.

Earlier this year, the government allowed sugar exports even as domestic stocks were under pressure. Predictably, local prices soared. Then came the tax-free import of 500,000 metric tons of sugar; a move that drew criticism from the International Monetary Fund, which questioned both its timing and its lack of transparency.

No one has explained who received import licences, under what conditions, or how the decision was justified while government revenues continue to bleed. What the country witnessed was a two-way windfall: profits made on the export side and further gains through duty-free imports. Also there is an issue of price collapse when the shipments arrive in November; around the time sugar mills will be buying from growers, giving them leverage to manipulate buying prices.

Throughout all this, regulators have remained silent. The Competition Commission has issued no inquiry into possible cartelisation. The Federal Board of Revenue (FBR) has not released any audits on sugar mill compliance or tax contribution. No action has been taken against mills for openly breaching their agreement with the government. When institutions with legal mandates refuse to act, the market ceases to be a marketplace. It becomes a racket.

This isn't new. But it's become more brazen. The previous PTI-led government also faced sugar price hike in 2020. However, its response was markedly different. Then prime minister Imran Khan ordered a wide-ranging inquiry, involving the FIA, SECP, FBR, and other agencies. The investigation looked into hoarding, tax fraud, price manipulation, and the misuse of subsidies.

Importantly, it didn't shy away from naming allies or investigating politically connected individuals within PTI itself like Jahangir Tareen. The inquiry report was published in full. While it triggered backlash, it also marked a rare moment where the state asserted its regulatory role over an entrenched industrial elite. The investigation was abandoned and charges dropped when the PTI government was removed.

What we are seeing now is the opposite. Instead of confronting the sugar mafia, the current government has aligned itself with it. Instead of enforcing transparency, it has shielded its members from scrutiny. At every step, decisions have served the interests of the few at the expense of many.

This has real human costs. Sugar is not just a luxury good. It is a daily essential for households and a critical input for small businesses. Rising sugar prices drive up food inflation, burden already stretched family budgets, and hurt bakeries, tea stalls, and street vendors across the country. When a government facilitates price spiral through weak enforcement and preferential trade decisions, it doesn't just fail the economy. It abandons its moral claim to serve the people.

To fix this, Pakistan must first acknowledge that the sugar crisis is not a temporary market blip. It is a symptom of a deeper structural disease: the collusion between political elites and monopolistic interests. The solution begins with cutting these links.

Public officeholders, and their immediate families, must be barred from owning or profiting from industries they are in a position to regulate. This principle is basic in any functioning democracy. Without it, policy becomes an instrument of personal enrichment, not public service.

Next, regulatory institutions must be depoliticised and empowered. Agencies like the CCP, FBR, and SECP should have independent boards, professional leadership, and the authority to publish findings without seeking ministerial approval. If sugar mills are in violation of tax laws or pricing agreements, the public has a right to know.

Trade policy must also be demystified. Export and import decisions, especially for essentials like sugar, should not be made behind closed doors. They must be based on evidence, presented in parliament, and subjected to public scrutiny. Import licences should be granted through open bidding, and their recipients disclosed proactively.

In the digital age, there's no excuse for opacity. A transparent digital dashboard that tracks sugar from mills to wholesalers to retailers would make it harder for hoarders and profiteers to operate undetected. It would also empower consumers and watchdog groups with real-time data.

Finally, subsidies and tax exemptions must be subjected to rigorous review. No tax waiver or import concession should be granted without a clear, documented public interest rationale. Otherwise, they will continue to be used as vehicles for elite enrichment.

The sugar industry has become a symbol of how deeply elite capture runs in Pakistan. But it can also become a turning point. If the state can confront the sugar mafia – not with hollow deals but with real accountability – it can begin to rebuild public trust and economic fairness. If it cannot, the crisis will return. Prices may dip briefly, but the profiteering will continue. This is not just about sugar. It is about who the system is designed to serve and who it leaves behind.

The writer is a graduate of the University of British Columbia