The country is in a continuous and unrelenting grip of prices of food items. As happens usually the role of the government machinery is confined just to issuing daily rates and leaving the consumers at the mercy of shopkeepers. The administrative set-up does not spend any time checking the real cause of price hike taking place either due to artificial shortages or stockpiling by both retailers and wholesalers. There exists a proper set-up for keeping prices in control but it has been rendered completely ineffective. This failure has given free hand to the trading classes that increases prices according to their whims.
True to their ingrained habit, the traders have ganged up to give a tough time to consumers, already groaning under the high food prices. They blame the government-sponsored drive to impose indirect taxation in order to raise revenue by any means to fulfill the requirement laid down by the IMF. The government revenue collecting agencies appear unconcerned about tremendous increase in the prices of items fuelling inflation.
The traders have already increased prices of almost all consumer items in wake of the swelling demand just before the month of Ramzan. This increase has now become an established feature and no one seriously questions it. Such increase is faced by the people twice a year in respect of two Eid festivals and once before the advent of month of Ramadan. These are however not the occasions when prices go up as the pre-and–post budget increases have also become a regular feature. Unfortunately public consciousness usually condones such excesses and people quietly pay the increased prices.
It is now reported that the import bill of edibles have ballooned up to 50.29 per cent to $5.344 billion year-on-year during the first eight months of 2020-21 to bridge the shortfall in domestic production of agriculture produce. The higher-than-expected food import bill also triggered trade deficit which would cause some uneasiness on the external side for the government. The share of food items in the total import bill reached 15.76% this year, compared to 11.29% last year, making the country dependent on imports to ensure food security. The trade deficit is widening as the overall import bill of the country has been on the rise since November last year, mainly due to an increase in the import bill of edibles. The import bill has increased by 7.67% to $33.897 billion in eight months this year as against $31.483 billion over the corresponding months of the last year.
The edible import bill of all products posted a growth in value and quantity during the period under review, a clear indication of shortage in domestic production. Within food group import, the major contribution came from wheat, sugar, edible oil, spices, tea and pulses. Edible oil import witnessed a substantial increase during the period under review in quantity, value and per value terms. Import of palm oil recorded a growth of 34.03% in value in eight months this year to $1.585 billion from $1.182 billion over the corresponding months of last year. In quantity, a growth of 7.71% was also recorded in import of palm oil during the same period. The prices of vegetable ghee and cooking oil posted a growth during the last few months for domestic users. However, import of soybean oil increased by 7.49% in value and 11 per cent in quantity.
Wheat was also imported in this time to the tune of 3.328 million tonnes worth $915.902 million in eight months this year as against no imports last year. The bulk import of wheat was made to bridge the gap between supply and demand of staple food in the market. More import of wheat is hinted at in order to build buffer stock to avoid shortages in the domestic market. Similarly, import of sugar stood at 278,733 tonnes in eight months this year as against 4,358 tonnes over the corresponding months of last year, showing an increase of 5,817 per cent. Import of sugar was aimed at maintaining the supply of whitener in the domestic market to fill the gap between supply and demand.
Already import of 500,000 tonnes of refined sugar and 300,000 tonnes of raw sugar for the millers is given to build carryover stock in the country. Import of tea posted a growth of 16.94% during eight months this year while that of spices increased by 31.32%. The growth is mainly due to a drop in import of these products under transit trade and controlling of smuggling at border areas. The import bill of pulses, dry fruits, milk products and other food products witnessed a massive growth during the period under review.
Now the traders of vegetables and greens have ganged up to give a tough time to consumers already groaning under the high food prices. The chances of any relief from escalating prices are virtually nil as the official sector is looking for ways to shift more burden on consumers. The ongoing rainy season will certainly bring in more price hike as the trades will hoard merchandise on the pretext of blocked roads and flooding in many areas of the country.
On the other hand, the government efforts to curb this inflation are scanty and they are not expected to yield desired results. The government has prepared the draft of the Pakistan Food Security Flow and Information Ordinance 2021 that aims to empower the federal government to fix prices and seek information about the supply and demand of the commodities. The move comes amid an anticipated wheat shortfall of up to two million metric tons this year and a race between the Sindh and Punjab governments to take lead in procuring maximum quantity of the commodity.
Accordingly to the ordinance, a management committee would be established under the Prime Minister with provincial chief ministers as its members, according to the proposal. The management committee will meet at least twice a year to review and fix the prices of essential commodities, it added. There will be an executive committee, to be presided over by the federal secretary, national food security and research and it will meet once in a month to ensure implementation of the decisions taken by the management committee. The draft of the ordinance suggested that Prime Minister wanted to address purely an administrative issue through legal means that may prove to be counterproductive in the absence of a constitutional cover.
In the meanwhile, it appears that the wheat production target at 27 million metric tons may not be achieved and actual production may be around 26.25 million metric tons, indicating a shortfall of 750,000 metric tons. It is accordingly estimated that the current wheat consumption, including seed requirement, will be at nearly 28 million tons. It is planned to import 1.5 to 2 million metric tons of wheat this year and it will be the second consecutive year when the PTI government would import wheat. It allowed the import of around 2.5 million metric tons wheat last year. The federal government also faces the problem of fixing a uniformed wheat price across the country which was also a reason behind the decision to promulgate the ordinance as it considers it is the right thing to fix the problem. TW