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Analysis

The Government Needs To Step Up Its Game To Control Food Prices

The government has failed miserably in controlling the food prices. With each passing day prices increase at an exponential rate and the poor have to bear the brunt of it. According to a report of Asian Development Bank, “Overall a 20 percent increase in food prices leads to an 8pc increase in the poverty headcount in Pakistan i.e., from 36pc to 44pc, with the negative impact of food price shocks falling disproportionately on rural poor, as opposed to the urban poor.” Similarly, the Pakistan Bureau of Statistics revealed that food inflation in Pakistan has remained in double digits. In the current year, it has reached a shocking 23.70 percent. The food inflation of the month of October is also not showing a rosy picture. It is 16.6 percent which is also very high. These statistics show that the government is not taking any substantial steps to control food prices. Another report shows that 37 percent of Pakistanis face food insecurity.

There are some major factors due to which the government is failing continuously to curb the skyrocketing prices of food commodities. Firstly, there is no system of local government which is a basic unit of governance. Committees formed under the LG system can keep a vigilant eye on hoarders and price makers. Apart from this, there is a severe lack of good governance. District administrations fail to ensure implementation of administered prices – or prices determined jointly by the authorities and producers at district levels.

Political instability is also pushing food inflation upward. Last month, when the capital was blocked by a religious group, the prices of food commodities increased by 2 times due to a shortage in supply.

Moreover, the middleman in Pakistan is exploiting both the farmers and consumers. They are the ones who reap the monetary benefits. The government has not implemented any check and balance mechanism on the role of middlemen.

The government has not devised any plan which can boost the productivity of agriculture. The productivity of our immediate neighbor India is 2 times higher than us, while its cost of inputs is lower. Similarly, Israel is a small country but it is a large exporter of agriculture-based products due to modernity and innovation in agriculture.

On one hand, the Pakistan government is raising tariffs on power sources like oil, gas and electricity, while on the other, it is claiming to be taking measures of price control. It will be difficult to control prices if the cost of power keeps raising Since gas is a basic ingredient of fertilizers, high tariffs mean higher prices of input cost. A rise in oil prices also increases the cost of making fertilizers which are needed for increasing the yield per hectare of the crop. Hence, a rise in the price of fertilizer translates into a rise in the price of crops. Not only that, rising fuel prices increase the electricity costs and, therefore, farmers have to use tractors and tube wells, and have to pay a higher cost for using the machinery.

Furthermore, the government is not diverting its attention to the basic problem of water shortage and it is not adopting new techniques of irrigation like drip watering. We still rely on the old age water-wasting irrigation system. According to the International Monetary Fund (IMF), “Pakistan ranked third among the countries facing severe water shortage. In May 2018, the Pakistan Council of Research in Water Resources (PCRWR) announced that by 2025, there will be very little or no clean water available in the country.”

Moreover, politics play a dirty part in Pakistan as cartels are easily formed to manipulate market prices. Such profiteering activities, along with black marketing and hoarding have further drowned the citizens in an already knee-deep flood of problems. We have also witnessed the role of politicians in the current sugar and wheat crises.

In addition to the above, a large chunk of food is smuggled to our neighboring countries which adds insult to injury for poor people. Similarly, our trade policy with our neighbors is also defective. We have been known to close off our trade completely as a result of disagreements, and the sanity of such a decision is debatable. For example, we have suspended trade with India and the poor are bearing the brunt of the high prices of vegetables, which used to be imported from India.

Furthermore, a crucial shortfall was witnessed on the part of the government as they unreasonably overestimated the annual wheat yield. The minister for food security said that in May 2020, the federal government was told that 0.3 million tonnes of sugar was surplus in the country but on 22 July, the provinces informed the center that there was 0.25 to 0.3 million tons of shortage.

It is also the need of the hour to devise a policy for population control. Currently, there is no suitable and workable policy that can control the burgeoning population, leading to an increase in the demand for food, which is, in turn, causing inflation.

The short- to medium-term solution lies in developing the capacity to predict food commodity markets, both domestic and global. It lies in quickly addressing supply chain disruptions and covering shortages through early imports. Long-term food price stability depends on the government’s willingness to revamp its agricultural policies, liberalise the trade regime, allowing market forces to freely play their role, reduce the cost of farm inputs, invest in high-yield and drought-resistant seed technologies, and give growers incentives to adopt modern farm practices to increase yields. Without increasing crop output, food prices won’t stabilise.

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Naya Daur