Mar 15 - 21, 2004





The incessant increase in the prices of the essentials, one after the other since late October last year, highlights the failure of the government to safeguard the interests of the people one of the top responsibility of the government anywhere.

The unstoppable price spiral, which by now has spread to many essentials, started with such a basic kitchen item as tomato, the prices of which touched record Rs 80 per kilogram. Soon it spread to wheat, the basic staple of most Pakistanis, pushing the price of wheat flour to as much as Rs 16 per kilogram.

The situation has not eased despite the early harvesting of wheat in Sindh and its arrival in the market here in Karachi. The retail prices of wheat flour have further soared to Rs 17 per kilo touching Rs 18 per kilo at one time. The known brands of wheat flour are just now available in the market and are available in depleting quantity way over the prices fixed by the government even at specials kiosks set at all so-called 'bachat' (saving) bazaars across the city on any given day of the week.

The only obvious lesson we have seem to have learnt from the wheat crisis is that we never learn from our mistakes. By September last year, a good five months after the wheat harvesting season comes to a close in the country, reports of wheat shortage started appearing in the national print media. However, the officials rejected the reports saying that there was no shortage of the commodity in the country. By late October, the wheat crisis headed towards a full blown dissaster pushing retail prices to unaffordable levels. The officials kept rejecting the reports of wheat shortage until the Economic Coordination Committee (ECC) of the cabinet decided to abolish the 15 per cent import duty on the commodity on the 29th of November last. The ECC, however, withheld any decision just how much wheat should be imported. because of the absence of reliable data on the stocks held by the private sector.



The government later decided to import half a million tons of wheat and allowed Pakistan Agriculture Stock and Storage and Company (Passco) to initially import 150,000 tons of the commodity early this year. At present four ships loaded with 150,000 tons of Australian wheat worth $ 30 million close to Pakistani waters are not allowed to discharge their cargoes because the shipment is rejected by the federal cabinet because samples showed that it was fungus-infested. The Australian Prime Minister John Howard has written a letter to President Pervez Musharraf to intervene to have the matter resolved.

The wheat crisis is reportedly caused by the massive hoarding of the commodity by the flour mills and the private traders who bought the commodity at official price of Rs 850 per 100 kilo. It was seeming sold at a huge profit by the flour mills to the traders in the private sector pushing the prices of unmilled wheat to over Rs 1,200 per 100 kilo thereby pushing the retail prices to levele where they are at present. The question is what the relevant government departments were doing to check the ever-present profiteering tendencies of the hoarders?

The record increase in wheat prices in turn has pushed the prices of bread and all confectionery items to the great inconvenience of the consumers who has to absorb the ever-rising costs of the essentials without any recourse whatsoever. The relevant government departments and the City Government have failed to check the rising prices thereby making the lives of consumers more miserable way. The prices of roti (flattened bread), bread and all confectionary items rusk, biscuits, cakes, etc. have gone up during the last few months and have also registered a further increase lately.

The Sindh government has failed to force the flour mills to supply wheat flour at official price of Rs 12 per kilo despite issuing numerous statements in last many weeks. The wheat flour is just not available at the official price anywhere and the failure of the government to enforce its diktat is seriously eroding the credibility of the provincial government that doesn't mean for the consumers

But wheat is just of the essentials whose prices are on a constant increase. Early this month, the dairy farmers decided to increase the prices of milk to Rs 25 per litre depicting around 13 per cent increase overnight. The price of yogurt has also gone up and despite hard talk the milk sellers are fleecing the consumers with their abrupt and mandatory increase. Whereas the price of vegetable have been increased similarly. The prices of 16 kilo tin of ghee crossed Rs 1,000 level recently.

Despite availability of huge carry-over stocks, on top of the fresh arrival, the prices of sugar have failed to show any signs of reduction thereby proving that the economic theory of demand and supply does not apply here in this country. The sugar industry pressurised the government to buy half of the total 400,000 tons of the surplus sugar by early this month at around $ 265 (around Rs 15,370) per ton way above the international prices. The decision to bail out the sugar industry would cost exchequers hundreds of millions in losses. The indifference to consumers, however, has not discouraged the sugar industry to ask the government to impose an additional levy of Rs 0.60 per kilo on the consumers to finance export subsidy.

The question is do the consumers be made to absorb the losses of an incompetitive industry which has refused to pass off any benefits of the surplus not as an exception but as a rule?