State-sponsored import/export racketeering Sugar out, wheat and cotton in: how policy capture converts scarcity into private profit  

Pakistan’s economic managers have perfected an extraordinary form of commerce: export when domestic abundance is uncertain, import when the resulting scarcity becomes unbearable, and make the public pay at every stage.

The latest illustration is the Economic Coordination Committee’s permission to the Trading Corporation of Pakistan (TCP) to invite tenders for exporting 108,000 metric tonnes of sugar. This is not ordinary trade. It is the residue of sugar imported only last year after domestic prices spiralled.

The state is preparing to send abroad the commodity it bought with scarce foreign exchange, while congratulating itself that sugar now averages Rs. 148 per kilogram—still a cruel price for households surviving on stagnant wages.

The decision compresses Pakistan’s political economy into one consignment. According to the Pakistan Economic Survey 2025-26, sugar imports during July–March rose to US$175 million from merely $2.6 million a year earlier.

Sugar was brought in, ostensibly, to restore availability and price stability. Now 108,000 tonnes of the imported stock are to be exported because millers want an outlet for “surplus”. If exports tighten supply and prices rise again, another emergency meeting, steering committee, tender and import order will follow. Private actors capture the gain; taxpayers absorb the freight, financing, storage, exchange-rate and administrative costs.

The scandal is larger than sugar. Pakistan—an agrarian country with the Indus basin, diverse climatic zones and millions of agricultural workers—spent US$ 7.1 billion on food imports in only the first nine months of fiscal year (FY) 2025-26, 15.2 percent more than a year earlier. Food formed 14 percent of the entire import bill. Palm oil alone cost US$3 billion. This is routinely described as a balance-of-payments problem. It is first a failure of land use, agricultural research, seed policy, water management, storage, competition regulation and distributive justice.

Wheat exposes the human cost. The latest Economic Survey claimed production increased by 4.3 percent to 29.61 million tonnes in FY 2025-26. Within weeks, the ECC convened an emergency meeting and approved the import of one million tonnes, estimated to cost about $340 million.

Provinces had demanded 2.2 million tonnes; 1.2 million tonnes of old PASSCO stocks were to be released. Wheat prices had reportedly jumped from Rs. 125 to above Rs. 150 per kilogram in one week. Either the production and stock data were unreliable, or grain existed but the state could not prevent hoarding and market manipulation. Both possibilities constitute a governance indictment.

The poor do not eat percentages. Wheat is the main staple of millions. When atta (wheat flour) becomes unaffordable, families do not rebalance portfolios; they reduce meals, protein, medicine and children’s schooling. PBS reported wheat flour inflation of 38.60 percent year-on-year in the week ending January 22, 2026; by May 21, the year-on-year increase had reached 59.45 percent. Such inflation is a regressive tax imposed without legislation. Its effective rate is highest on the have-nots because food takes the largest share of their income.

Pakistan learnt nothing from the 2024 wheat-import debacle. Millions of tonnes were imported after a good domestic crop was already approaching market, depressing farm-gate prices and leaving growers unable to recover costs. The importing lobby gained business; farmers carried losses; the exchequer and foreign exchange bore the burden. Policy then swung in the opposite direction, state procurement retreated, strategic planning failed, stocks tightened and prices surged. The pendulum is presented as the invisible hand. In reality, privileged hands move it.

Cotton tells an even more painful story. The fibre once called Pakistan’s “white gold” linked farms, ginneries, spinning, weaving, garments and exports. Our lint was compared with the best, including Egypt’s celebrated cotton. Today, the country that built its industrial base upon cotton must import almost half of its mill requirement. A United States Department of Agriculture (USDA) assessment estimates actual FY 2025-26 production at only 5.3 million 480-pound bales and projects  FY 2026-27 production at 5.05 million, against domestic use of about 10.2 million. Imports are projected at 5.2 million bales.

This collapse is not an act of nature. Cotton acreage has stagnated as growers shift towards sugarcane, rice and maize, which offer more predictable returns. Poor-quality seed, pest attacks, heat stress, rising input costs, weak extension services and erratic water availability have lowered productivity.

Tax policy adds its own absurdity: an 18 percent sales tax on domestic cotton transactions encourages under-reporting and disadvantages the local value chain, while imported fibre remains commercially attractive. USDA estimates that 28–30 percent of the FY 2025-26 crop went unreported. A tax system that makes domestic production disappear statistically, while facilitating imports, is not revenue policy; it is self-harm.

Textiles still generated US$13.5 billion and 59.6 percent of merchandise exports during July–March FY 2025-26. Depending on imported raw cotton therefore imports vulnerability into the country’s principal export industry. Dollars earned by garments are recycled to purchase fibre that Pakistani farms once supplied. This is celebrated as export performance, although the net domestic value added, rural employment and foreign-exchange retention are progressively weakened.

The common structure is unmistakable. Commodity policy is made through closed-door meetings, hurried summaries, contested stock estimates and discretionary permissions. Export bans, quotas, duties, exemptions, subsidies and import tenders create artificial scarcity rents. Those with political access know when the gate will open and when it will close. Farmers sell before the favourable decision; traders and processors hold stocks; consumers buy after the price increase. Losses are socialised through TCP, PASSCO, banks and the budget, while gains remain private.

Government calls this market management, although a genuine market requires transparent information, open competition and equal rules. Pakistan instead has managed markets for the powerful and unmanaged misery for consumers. Competition Commission inquiries, parliamentary committees and investigative reports appear after every sugar or wheat crisis. Rarely does accountability reach the decision-makers, beneficiaries or officials who certified misleading production and stock positions.

The answer is not permanent bans on trade. Imports are justified after genuine crop failure; exports are desirable after a verifiable surplus. The issue is sequencing, transparency and public purpose. Before permitting export of any essential commodity, the government should publish crop estimates, mill-wise stocks, public inventories, domestic consumption, strategic-reserve requirements, export price, landed import cost and the names of beneficiaries.

The Auditor-General and parliamentary committees must examine the complete profit-and-loss trail of every state import followed by re-export. No export should be allowed where it threatens a food-security floor or where the commodity was imported with tax concessions, subsidy or public financing, unless the full public cost is recovered.

Agricultural policy must return from traders’ tables to farms. Pakistan needs certified climate-resilient seed, independent crop reporting using satellite and field data, water-efficient cultivation, pest research, modern storage and warehouse receipts, enforceable competition law, crop insurance and predictable prices rather than ad hoc support.

Oilseeds and pulses deserve a national import-substitution programme. Cotton requires a ten-year revival compact joining growers, researchers, ginners and value-added exporters. Wheat procurement reform must protect small farmers and strategic reserves without recreating wasteful, debt-financed stockpiles.

Above all, Parliament must end discretionary commodity governance by executive committees susceptible to capture. Every rupee of subsidy, tax waiver, carrying cost and trading loss should be disclosed under Article 19A of the Constitution. Beneficial owners of importing and exporting firms must be public. Officials and ministers making decisions on essential commodities should disclose conflicts of interest. Food security cannot remain a playground for cartels.

A country does not become export-oriented by shipping out sugar today and importing it tomorrow. Nor does it achieve food security by announcing record wheat harvests before ordering emergency imports.

Real economic sovereignty means producing efficiently, rewarding cultivators fairly, adding value at home and ensuring that bread remains within reach of every citizen. Pakistan’s import-export racket achieves the reverse: it impoverishes the farmer, overcharges the consumer, drains foreign exchange and enriches intermediaries. That is not commerce. It is redistribution—from the hungry to the connected.

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Dr. Ikramul Haq, Advocate Supreme Court, writer, literary critic, Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE), holds an LLD in tax laws. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He also served Civil Services of Pakistan from 1984 to 1996.