SKYROCKETING FOOD PRICES
SHABBIR H. KAZMI
July 18 - 24, 2011
Food prices are rising rampantly. While some of the analysts attribute this to hike of commodity prices in the global markets, others term it profiteering by the local vendors.
However, the growing consensus is that those responsible for overseeing prices are keeping their eyes closed, as they get the share in the booty.
Although, the government has not increased wheat support price this year, flour prices are being increased with regular intervals. Flourmills attribute this hike to rising energy cost and prolonged load shedding of electricity and gas. The hike in flour price also results in increase of price of bakery products.
Price of cooking oils has been on the rise despite lowering of prices in the global markets. For years, experts have been emphasizing on increasing indigenous production of oil seeds, particularly corn, canola, and sunflower. However, it seems that edible oil importers' lobby is very strong. One can still recollect that lately the central bank announced disbursement of loans to the edible oilseeds growers located in the flood-affected areas, the scheme was opposed on the grounds that it would lead to reduction in area under cultivation of major food crops, particularly wheat.
Over the last couple of years, Pakistan has been witnessing sugar crisis. In the recent past, its price touched almost Rs100 per kilo in the retail market. Till recently, the product was sold around Rs60 per kilogram but it is feared that during the holy month of Ramadan price of sugar will once again surpass Rs80 per kilogram. This can be attributed to nothing except profiteering as the country has ample stock of sugar. In fact, the stock is more than the requirement of the country and the government has resisted its export mainly to ensure stability in price.
Similarly, prices of beef, meat, chicken, and eggs are touching new highs. While hike in prices of beef and meat can be attributed to unchecked export of these items, hike in chicken and eggs is being attributed to the raise in price of poultry feed. Those related to poultry farming attribute increase in chicken and eggs prices to imposition of tax and also to collection of booty by the elites of the areas where poultry farms are located and also to the traffic police.
Since the vehicles carrying live chicken move in the early/late hours, they are forced to pay 'bhatta' to different mafias.
Persistent increase in the prices of fruits and vegetables is attributed to unchecked export also.
In an attempt to boost dollar inflow, the government encourages export of virtually each and every item. It is on record that in the past the country exported wheat, onion and tomatoes but subsequently these were imported when prices went up too high. It was not the first time, but has been happening with regular intervals.
Pakistan also faced a similar situation in 2008 when wheat was exported.
Manufacturers of made-ups were demanding ban on export of raw cotton and yarn but to no avail. Soon a point reached where the country was forced to import one million bales. While this unchecked export of cotton impaired operations of manufacturers of made-ups, spinners made a fortune. However, soon the honeymoon was over due to decline in cotton prices in the international prices of cotton. A point has reached where some of the spinners are incurring huge losses.
Some of the experts say that persistent hike in POL prices, prolonged outages despite increase in electricity and gas tariffs are adding to the cost of production, eroding competitiveness of the local manufacturers and about all making lives of people miserable.
The worst victims of curtailed supply of gas to fertilizer industry are the farmers and the consumers. During first six months of calendar year 2011, price of urea has gone up by 40 percent. There are suggestions that price of gas for the fertilizer industry should be doubled to get rid of subsidized gas supply to the fertilizer industry.
The proponents fail to understand that gas is being supplied at lower price to the fertilizer industry to keep retail price of urea low and in turn keep the prices of agricultural produce low.
Policy planners have completely failed in understanding the fact that persistent hike in price in general and food items in particular are creating havoc for the masses. More and more people are being pushed below the poverty line, also affecting savings to GDP ratio.
Added to this is imposition of GST on all products, including food items. Most of the parents belonging to lower income strata have stopped sending their children to schools plunging literacy level in the country and adding to the list of unemployed people.
The government very proudly says that it is distributing billions of rupees under the Benazir Income Support Program. However, it hardly realizes that it is creating a new class of baggers. If the government is sincere in providing Roti, Kapra and Makan it should focus on creating new employment opportunities, improving disposable income and above providing incentive for savings. The program is good for providing temporary support to people but likely to result in massive misappropriation of funds.
People living in Karachi face the tyranny because not only employment opportunities are on the decline but killings, strikes and precarious law and order situation are also affecting daily wagers the most.
Business activities can only flourish when there is a peace. The flight of capital from Karachi has started once again. However, the situation is more or less the same throughout the country. The apathy of rulers is at the peak and many of the elected members of national and provincial assemblies and senate seem too busy in minting money than resolving problems facing the masses.