Food commodities’ price spiral

Food commodities’ price spiral

Despite the supply augmenting measures through imports and promulgation of Anti-hoarding and Anti-profiteering Ordinance, the prices of wheat flour, sugar and other food commodities of daily consumption have abnormally gone up, showing no trend of coming down to the demand-supply equilibrium. The flawed decision of import of wheat and sugar through private sector, including some cartels’ stake holders mentioned in Inquiry Commission Report, is one of the reasons of unstable price situation.

Chairing a meeting to review availability and prices of wheat and sugar, Prime Minister Imran Khan directed to keep him regularly apprised of the import process of wheat. He was told that 400,000 metric tonnes of wheat has so far been imported by the private sector and additional import shipments of one million tonnes will reach next month. The Prime Minister was informed that sugar import also continues.

The law of demand and supply tell that with increase in supply the price level falls. But at present in Pakistan the opposite is happening. After the acute wheat and sugar shortages few months ago, ECC decided to allow private sector to import unlimited quantities of wheat and sugar by doing away with the condition advance payment of income tax and lowered the import duty. At that time an advice was given to the decision makers in the comments of these columns to put in place a mechanism of keeping away the cartels’ stake holders from the import business if government really wants to stabalise the prices of wheat sugar at reasonably low level. However, it was later reported in a leading English daily newspaper that in one of the cabinet meeting some members had questioned the rational of exemption given to certain importers of wheat, who have been found involved in hoarding of the commodity, which led to its shortage and snowballing of price rise. The findings of Inquiry Commission report against the sugar and flour millers have exposed their monopoly, hoarding and Cartelisation tactics to raise prices.

The prevailing retail price of Rs.1400 per 20 kilogram of wheat flour and sale of sugar at Rs.110 per kilogram points to the bitter fact that imported quantities of these food commodities have ended up in the hands of cartels. The phenomenon of unbridled price spiral has to be summed up in the famous sayings of founder of “Classical School of Economic Thought,” Dr. Adam Smith. “If wishes were horses, beggars might have riding on them all the time.” Hopefully, strong administrative and legal actions shall be taken as mere review meetings will not achieve stability in the prices of essential food commodities.

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