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CPEC debt cycle begins for Pakistan

Sugar crisis to follow wheat crisis

Pakistan is now set to experience sugar shortage amidst the prevailing acute wheat availability crisis. The wheat scarcity has led to whopping increase in prices.

Despite being self-sufficient in both food items, Pakistan being majorly an agrarian society, the problem of shortage will now lead to 30% increase in case the export quantity is not controlled and lowered by the Government. During the previous year, Pakistan produced 600,000 tonnes of sugar.

During the reign of PTI government, the country witnessed wholesale price reach Rs 64 per kilo. The acute shortage led to Rs 74 wholesale price within a week.

Paradoxical Genesis of the Problem

The crisis hit the country, particularly Khyber Pakhtunkhwa (KP) and Sindh last November 2019, when transporters went on strike in Karachi protesting against the increase in petrol prices thus affecting flour supply in the local markets of Sindh.

Another factor that led to wheat flour shortage in KP was a ban on the inter-provincial movement of wheat between Punjab and KP. The provincial government attributed unchecked smuggling of wheat to Afghanistan as the main reason behind clamping down on the inter-provincial movement of the commodity. This is a classical case of understanding the manner in which Government businessmen racket plays.

Government(aka Pakistan Army) – Businessmen Racket

Reason is simple, Government has kept the minimum support price of Rs1,300 which is paltry. This amount is lower than what is there in international market as well as, at the rate on which middlemen businessmen smuggle it out to Afghanistan.

Pakistan exported more than 600,000 metric tonnes of wheat from late 2018 to June 2019, its statistics bureau says. Although the government banned exports in July 2018, still 83,000 metric tonnes were still sent overseas until December 2019. Economic experts say it made no sense to export the wheat after poor crop yields in the last harvest and called for an inquiry into the exports despite the ban.

It’s well known, these exports are furthered under major businessmen, which in turn employ regional middlemen and Adhoc export outlets, sublet to influential and retd Pakistan Army Officials and their kins.

“Someone made billions,” said opposition party leader Khawaja Asif said, adding that he suspected the wheat crises might be the result of a scam.

In January 2019, the food department of Punjab had 4.26 million tons of wheat in its reservoirs. Lacking basic infrastructure, due to decades of the indifference of governments, choosing CPEC to infrastructure development, as storage of such a huge quantity of wheat is a costly business. The government of Pakistan generally exports half a million tons of grains to offload the stocks.

After April 2019, with 1.5 million tons of carry forward stock (after the releases to flour mills), the food department of Punjab procured another 3.3 million tons of wheat at the rate of Rs 1300 per 40 kg; 4.8 million tons of wheat is enough to meet domestic requirements.

In the garb of driving growth, key Pakistan Army Officer’s owned flour mills, feed millers (who were experiencing the shortage of maize), and private investors were also allowed to buy wheat from the farmers in Punjab. It is estimated that feed millers procured 0.6 to 0.8 million tons of wheat. Due to Pakistan Army’s bullying, through government channels, the food departments of Sindh, KP, Pakistan Occupied Kashmir and Balochistan could not procure any wheat. Thus there was bound to be a shortage of wheat in the autumn months.

Subsequently, in the run-up to the IMF programme, the rupee got depreciated against the dollar and the prices of wheat in the international market became higher than the domestic prices, turning it lucrative for Pakistan Army Officer’s owned investors, to send their wheat to Afghanistan and Central Asia. This created a demand for wheat in the open market, which in turn resulted in a price hike as well as hoarding.

This was ratified by Bajwa’s meet with top businessmen in Oct 2019. This is the appreciated outcomes, of loosening hold of governance in the economy of Pakistan, to control of businessmen, in return for CPEC adherence. After all, a businessman will definitely earn somewhere else, a cost of common Pakistani’s Bread.

Bigger Crisis

Pakistan’s Flour Mills Association (FMA) complained that they did not receive any subsidy from the government while in addition to the price of raw commodity, the gas and electric prices were hiked up as well. Thus they did not have any other option but to bump up the flour prices.

In the autumn months, the issuance of stocks to flour mills started at Rs 1375 per 40 kg (34.37 per kg); in return, the flour mills are bound to sell the 20 kg wheat flour bag for Rs810 (Rs40.5/kg). Flour mill owners are charging Rs11.50 per kg as the cost of overheads/electricity/gas/labor etc

This is the infrastructure and energy crisis, which CPEC has brought to the table, designed by shady political-Military nexus, however, paid for by Common Pakistani.

A nation which pays the Chinese, for negative returns, shall have various crisis, at its doorstep, and this is just the beginning.

ViewPoint

Agriculture currently accounts for 20 percent of Pakistan’s GDP but employs 43 percent of its labor force, more than any other economic sector. Despite the industry’s size, it has long been hindered by water scarcity, energy shortages, and poor post-harvest infrastructure, which results in about one-third of the country’s produce going to waste before it reaches the market.

Given the CPEC debt which has rained havoc on Pakistani infrastructure since last eight years, and shall continue to do so this century, Infrastructure is likely to continue to suit only China’s economy.

It is now bare, to be seen that the businessmen were brawled by Bajwa in Oct 2019 while paraded before the Pakistan Army GHQ, to subjugate their enterprise to the China’s CPEC designs, while they can make do with mayhem in Pakistan’s internal Economics. Sounds very much like the way British colonialists designed Famines from 19th century till freedom, using the various subjugate so-called rulers and Zamindars.

Effects of Chinese colonization of Pakistan are very much visible. It’s a trend that’s only going to escalate.

29 Jan 20/Wednesday                                                                     Written By: Fayaz

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