July 31, 2006	Monday	Rajab 4, 1427

JUST a few weeks ahead of Ramazan, the prices of essential items are showing an upward trend, posing a serious challenge to the authorities committed to keeping the prices stable.

Sensitive issue as it is, the price spiral of essential items has raised serious nation wide concern, equally shared by President General Pervaiz Musharraf and Prime Minister Shaukat Aziz. From time to time, they have issued instructions to relevant departments to closely monitor and check prices from rising.

However, making good policies and issuing orders is one thing but their implementation is another.

Apparently, they are not so much worried about the shrinking purchasing power of the consumers owing to rising food inflation, a consequence of the current economic growth model.

Just on the eve of Ramazan (starting in last week of September), government officials will hold a series of meetings with the producers, wholesalers, retailers etc for fixing the prices below the prevailing market rates. By that time, the market players will further push the price to the maximum.

To show sympathy with the consumers, some traders will also offer a Rs1-2 per kg discount on some essential items while others may refuse to follow their peers.

Without any in-depth study, the price regulators are bound to fix the rates on the terms dictated by market forces. They are hardly equipped to monitor the data on import of commodities, local production, demand and supply gap, stock situation etc., which could help them have an upper hand in fixing prices. So far, the performance of the authorities has fallen short of the consumer’s expectations.

Consumers have suffered because of inefficiency of the price regulators in fixing and monitoring the prices, while producers, wholesalers and retailers of essential commodities make windfalls.

Now, the city government officials have been invested with magisterial powers to check profiteering but the consumers have yet to see tangible results. Many say that some 50-70 top officials including EDOs, DDOs revenues, mukhtarkars and assistant mukhtarkars will not be enough to handle the mega city.

Let’s start with maneuvering by traders from the price hike in loose milk and yogurt to Rs30 and Rs44 from Rs28 per litre and Rs40 kg respectively during March. But so far, the city government has not taken any action.

The city government had issued a notification in the third week of April fixing milk price at Rs28 per litre. During the last four months, a number of meetings with the dairy farmers, retailers and wholesalers of loose milk were held but with no positive outcome for the consumer.

It was reported that the city government was coming out with a token system which would be issued on spot to retailers for charging higher prices but nothing had happened so far.

Nor has the City government taken any action against the dairy farmers who triggered the increase in prices. Dairy farmers attributed the increase in prices to the rise in fodder, transportation cost etc.

The second price hike came in beef (with bones) surging to Rs140 last month from Rs130 per kg in May while retailers were charging Rs170 per kg (with bones) as compared to Rs160 per kg. Mutton is selling at Rs260-270 per kg as compared to Rs240-250 per kg. Again the City government has been a silent spectator to rising meat prices. Some accuse its officials of striking a deal with the stakeholders of meat and milk which, they say, explains why no action has been taken so far.

The third price hike was made by leading tea packers in April-May by 7-8 per cent owing to price increase in Kenya from where half of the country’s requirement is met through imports. The increase in price of tea was caused by drought in Kenya.

The prices of pulses had remained under pressure because of costlier imports and very low local production. The government responded by announcing a subsidy on gram (whole black) of Rs8 per kg but it had yet to make any impact on the prices as some importers were facing problems in getting the subsidy from the State Bank of Pakistan (SBP) as the central bank had sought clarification from the government on imports coming under its old name desi chic peas.

The government provided relief in pulses price at the limited number of utility stores by offering Rs10 per kg discount. But the majority of buyers rely for their purchases on retail shops.

According to Economic Survey 2005-2006, gram production has declined by 39.3 per cent during July-March 2005-2006 to 527,000 tons from 868,000 tons in the same period of last fiscal.

According to wholesalers, gram production had been just 350,000 tons and there was some 100,000-150,000 tons carryover stocks as against the annual consumption of 750,000 tons.

There was some decline in the wholesale rate by Rs2-3 per kg when the government had announced Rs8 per kg subsidy in June. However, the wholesale rates again reversed to Rs36-38 from Rs33-35 per kg on Indian ban on gram export.

Due to delay in releasing the subsidy amount and low production, the price of gram pulse had surged to Rs42 compared to Rs40 per kg on July 1.

Pakistan is also facing production shortfall in other pulses. Production of masoor, mung and mash has declined to 22,400, 114,000 and 16,500 tons during July-March 2005-2006 as compared to 26,000, 130,000 and 18,300 tons in the previous year.

The price of masur has surged to Rs36 from Rs32 per kg on July 1, while mung price has increased to Rs65-66 from Rs60 per kg. Mash is selling at Rs70 as compared to Rs68 on July 1.

Before Ramazan, there has been virtually no relief for the consumers in any items. Consumption of gram in the holy month jumps rapidly owing to its use in making pakora, a must item in the menu in every house.

In third week of July, the 100 kg wheat bag became costlier from Rs1,065 to Rs1,120-1,130, pushing up the price of atta No.2.5 to Rs980-1,020 from Rs950-1,000 per 80kg bag depending on the quality.

The wholesale price of atta No2.5 is now tagged at Rs12.50-12.80 per kg as compared to Rs12.00 per kg two weeks back. The price of fine atta has risen to Rs13.50 from Rs12.50 per kg.

Makers of Ashrafi fine atta have raised prices to Rs150 from Rs145. It is sold at Rs155 in retail markets. As a result, some leading flour millers, who also run bread-making industries, have raised prices of bread and its products. The price of small bread is now tagged at Rs12 from Rs11, while medium-sized bread of Rs15 now sells at Rs17.

Now the edible oil sector (Pakistan Vanaspati Manufacturers Association) has come out with a threat for substantial increase in the prices before Ramazan owing to increase in palm oil prices in Malaysia despite the fact that the 16 kg ghee and oil producers have already enhanced the rate to Rs890 as compared to 800 last month.

However, leading branded ghee and cooking oil makers have yet to pass on the impact of rising cooking oil prices to the consumers. Has the government checked the increase in prices by some producers before the PVMA threat?