TACKLING FOOD SHORTAGE, FOOD INFLATION
Nov 30 - Dec 06, 2009
Pakistan has been ranked 11th on the food security index and is at extreme risk, according to a recent report of a British company, Maplecroft, which provides risk intelligence service for businesses. Pakistan, ranked 11th on the index, is at 'extreme risk', while Bangladesh and India are both at 'high risk', ranked 20th and 25th, according to a Food Security Risk Index ranking of 148 nations.
Only states like Angola, Haiti, Mozambique, Burundi, and Congo precede Pakistan among the 148 countries. The country needs technology to save the nutrition value in the feed production sector and the country is looking forward for investment from internationally reputed firms in agro-based industries.
Common people are hard-hit by unprecedented rise in the prices of food basket-items in Pakistan. The food inflation has touched new heights during the last one year. The steady increase in the prices of 24 consumers' items has pushed up the overall inflation to a new historic height.
The country's strife-battered economy, combined with higher than usual prices for staples such as sugar due to alleged hoarding by producers, has drastically weakened the purchasing power of the country's largely impoverished population of 170 million.
The CPI (consumers price index) inflation increased to 10.93 percent in the first two months (July-August) of the current fiscal year 2009-10 over the same period of last year, as the prices of essential commodities such as food, fuel and lighting, household equipment along with transport and communication continued to soar, according to the Federal Bureau of Statistics (FBS). The SPI (sensitive price index) and WPI (wholesale price index) inflations also increased by 9.38 percent and 0.38 percent respectively during the period under review. The food inflation was as high as 10.59 percent, non-perishable food items 9.65 percent and perishable food items 17.27 percent.
The country witnessed massive growth of cartels in different industries during last one year that created demand and supply problems driving the prices of essential commodities higher. The alleged cartelization by food industry including sugar, flour, and milk producers has further complicated the lives of already inflation-hit masses. The shortage of sugar led to spiraling of sugar price, taking it out of common man's reach.
The country is facing a sugar crisis, which also indicates how poor governance can directly hurt the people. Though there is no shortage of sugar, yet it is not available in the market due to massive hoarding and black-marketing. Growers have a cartel of their own, while some have switched to more lucrative rice. Millers are accused of their own manipulations: calculating the price of cane on weight rather than sucrose content; delaying payments to growers, etc.
Amidst all of this, there is no forum for the protection of consumers. When the international price of sugar is low, suppliers urge the government to impose duties on sugar to prevent its import, but when the price is high in the international market, the suppliers raise domestic prices on that pretext.
The widening demand and supply gap for essential commodities need to be arrested and steps should be taken to remove snags in supply-chains. The price-hike has hit the general masses, who are looking to the democratic government for relief.
The storage capacity of each province needs to be increased. For instance, Balochistan's total storage capacity of 0.223 million tones should be enhanced after the federal government increased the strategic reserve quota of wheat from 0.5 million tonnes to 1 million tonnes annually. The provinces should adopt their own mechanism for maintaining wheat stock and prices.
During past three years, milk prices witnessed a steady rise all over the country. Despite having a large population of livestock, Pakistan spends some $50 million annually on the import of formula milk. There are some 160 varieties of infant formula milk available in the local markets. In the given situation, the only way to control prices is to develop the dairy industry on scientific lines, which will not only provide meat and milk in abundant quantities to the domestic consumers but extra quantities can also be exported.
The smuggling of lucrative Pakistani subsidized wheat to Afghanistan has been a key reason that created shortage of wheat in the province. According to an estimate, about 1.5 million tons of flour crossed over to Afghanistan in the last financial year as against the officially allowed quota of 0.5 million tons a year. The smuggling needs to effectively be checked. Frontier Corps need to take effective measures to foil all bids to smuggle wheat via border town of Chaman to Afghanistan.
Some people hold flourmill owners responsible for the wheat shortage and the escalation of its price and accuse them of hoarding the commodity. They say that though the government provides wheat at the lowest rates to millers, yet they sell wheat flour at the increased rates. Had the flour millers stopped buying wheat from the open market and depended on the government wheat, the flour prices would have declined last year.
Federal Food Committee (FFC) has advised the provincial governments to establish control rooms to monitor the situation and has also given special powers to district administration to tackle the situation. A plan for imposing ban on the establishment of new flourmills and expansion of the existing mills is reportedly under consideration of the government.
Last year, Frontier Corps personnel had been deputed at flourmills and warehouses all over the country. Federal government had even asked the provinces to find out from electricity bills of the flourmills that how much they are grinding extra wheat above from government quotas.
On the other hand, the flourmill owners complain that they get wheat from food department, which does not supply wheat according to the grinding capacity of their mills and the department is even unable to maintain the level of supply to mills. They complain that their mills work only for one hour, against a working capacity of 8 hours. They have to bear expenditures including labour charges, transportation charges, salaries, and electricity charges.
Despite demand and supply problems, the government needs to control profiteering and hoarding of commodities by some unscrupulous traders and sellers in the local market. The price-control committees at district level need to be activated and their performance should be improved. The monitoring functions of these committees need to be improved and enhanced in all the towns across the country.