THE prices of sacrificial animals plunged just a day before Eid-ul-Azha, sending shockwaves among investment-hoppers and animal sellers while raising some points to ponder.

“The lesson learnt is that beware of live electronic media coverage,” said Muhammad Nasim, an animal seller at Karachi’s main animals market, when asked about the price-crash (see table).

“In eight out of first nine days of Zil-haj, the TV channels kept giving news of animal prices skyrocketing. On the ninth day, they started saying we were begging buyers to buy our animals.” That, according to Nasim, was the main factor behind the market crash.

“Others, however, reported oversupply of animals in hundreds of irregular markets across Karachi, enough early buying of animals by the organisations involved in collective sacrifice and larger-than-expected influx of animals from flood -hit areas of Punjab as some reasons of decline in animal trade,” he added.

Growing presence of investors, expanding e-market, rising collective sacrifice of animals and extensive live TV coverage are redefining market dynamics

Some frustrated animal sellers even invented a conspiracy theory. They said the price-crash story was deliberately circulated after some big investors had made billions of rupees and they wanted to inflict losses to out-of-the-loop animal traders.

Growing presence of investors, expanding e-market, rising collective sacrifice and extensive, live TV coverage are redefining dynamics of sacrificial animal market. Whether the latest market crash was a manifestation of the changing dynamics, can be argued.

One big charitable organisation (not Edhi) and a religious party (not JI) had invested Rs3.5bn and Rs6bn respectively in sacrificial animals this year, market sources told Dawn. Truckloads of large animals for both organisations came to Karachi well before Eid-ul-Azha. These sources say officials of the two bodies who were also indirectly trading animals in Karachi’s main market were the first to start selling animals at half their prices. But, then, this could be due to their plain trend-reading!

Ever-increasing prices of sacrificial animals bring bonanza for investors chiefly in urban centres and also benefit landowners and livestock breeders in rural areas.

Profits earned are distributed more widely in cities among members of investors’ club, online animal sellers and workers who take care of animals or do their e-marketing. In some cases, one person or one group wears all hats but in most cases, the roles are divided.

But it is often a closed-circle affair, run in collaboration with overseas Pakistanis, local NGOs, charities and chains of religious schools. Price-setting has more to do with the source of money spent on rearing of animals rather than the actual cost incurred on the exercise.

Investment-hoppers, who keep switching over from stocks to commodities to once-a-year trades like that of sacrificial animals, have their own preferred levels of margins. And animal sellers are bound to ensure realisation of those margins, inquiries reveal.

Some people blame the electronic media for animal price inflation. They say the news showing exceptionally pricey animals with their owners claiming they’ve fed them honey, milk and almonds— and incessant talk about ‘costly animals out of the public reach’ make realistic price-discovery difficult.

“This is true to some extent not just in the context of sacrificial animals but in case of everything of which prices are not regulated,” says a central banker, adding that “anything that increases inflationary expectation actually contributes to fuelling increase in prices.”

However, fundamentals like inflation in the economy, ever-rising cost of animal feed, medicines and transportation and increase in demand for sacrificial animals definitely weigh on their prices.

In the absence of any organised mechanism for data collection on sacrificial animals, guesstimates keep popping up. According to the estimates of FPCCI’s sub-committee on livestock, this year, over 6m cows, bulls, calves and camels and more than 1.5m goats and rams were sacrificed.

The committee has estimated the total cost of these animals between Rs275-300bn, based on average prices of animals.

Regardless of how realistic are those average prices, the point that needs attention is the enormity of the sacrificial animal market. If we take into account a host of ancillary trading and manufacturing activities, the size of the Eid-ul-Azha economy would expand further.

Such a huge market deserves proper research and policy focus to determine its size, help people in price-discovery, study the impact of the market dynamics on the economy, food security, banking and money circulation.

Over the past few years, the registration of sacrificial animals arriving at ‘exclusively set up markets’ has become more documented providing one basic source of data.

But several things belittle its importance: arrival of animals into small, informal markets in all big cities remain unregistered; unsold animals that go back to rural areas from both established and unauthorised markets are not counted; and, the stats related to the arrival of animals in even authorised markets are compiled on city level, with no system in place for country-wide integration.

Prices of animals reported in media are also not compiled by government agencies for working out averages to better estimate the market size, or to set indicative upper limits.

Published in Dawn, Economic & Business, October 13th, 2014