Read on Twitter
Most seem focused on finding villains in this sugar crisis report.
But the report does not talk about the real crisis that is eating away at agriculture and the broader economy in Pakistan. https://www.dawn.com/news/1546520
But the report does not talk about the real crisis that is eating away at agriculture and the broader economy in Pakistan. https://www.dawn.com/news/1546520
The real crisis is that of a broken decision making process - in current and previous regimes.
I gave examples of this in my podcast with @UzairYounus
Here, I'll highlight the flawed thinking behind sugar and agricultural policy in Pakistan. https://soundcloud.com/tabadlab/pakistonomy-episode-04-atif-mian
I gave examples of this in my podcast with @UzairYounus
Here, I'll highlight the flawed thinking behind sugar and agricultural policy in Pakistan. https://soundcloud.com/tabadlab/pakistonomy-episode-04-atif-mian
Let's start with the subsidy that has been given by successive governments to the sugar industry.
Under what rationale was this decision taken?
A government should only provide a subsidy, if the subsidy relaxes a fundamental constraint or generates positive spillovers.
Under what rationale was this decision taken?
A government should only provide a subsidy, if the subsidy relaxes a fundamental constraint or generates positive spillovers.
Neither is true in the case of sugar.
Those who get the subsidy are some of the wealthiest and hence least constrained businessmen in the country.
And sugar is not a high tech industry. So no justification for "infant industry" protection.
Those who get the subsidy are some of the wealthiest and hence least constrained businessmen in the country.
And sugar is not a high tech industry. So no justification for "infant industry" protection.
The case for sugar subsidy is even more problematic given how water-intensive its production is, and how serious the water shortage problem in Pakistan is.
Water should've been "priced" appropriately, with farmers nudged toward using more water-efficient methods and crops.
Water should've been "priced" appropriately, with farmers nudged toward using more water-efficient methods and crops.
Yet government subsidized sugar twice! First by giving free access to water, and second with the financial subsidy.
Clearly no one thought this through - or perhaps collective interest lost in the face of special interest.
Clearly no one thought this through - or perhaps collective interest lost in the face of special interest.
Agriculture should have become the backbone of economic development in Pakistan.
It is the ideal sector for providing broad-based growth that can then drive demand for other sectors.
But doing so requires competent decision making, and investment in R&D to boost productivity.
It is the ideal sector for providing broad-based growth that can then drive demand for other sectors.
But doing so requires competent decision making, and investment in R&D to boost productivity.
Imagine if instead of subsidizing sugar barons, the government invested in domestic research capacity to produce much-needed pest-resistant seeds, efficient farming techniques, and the like.
those who fail to plan, plan to fail.
those who fail to plan, plan to fail.
