AS prices of almost all staple vegetables — tomato, onion, garlic, ginger, etc. — shoot through the roof, the provincial governments are in the middle of a massive administrative crackdown to keep prices in check.

The extent and depth of these measures are telling. On Nov 13, the Punjab government reported 8,316 raids in 24 hours, registering 110 cases against violators of daily price list, arresting 57 of them and slapping fines worth Rs2.46 million.

These raids are a routine exercise for a week now. However, with the magistracy system gone, these punitive raids are more of a firefighting exercise, conducted on the pressure, and under the glare, of media to satisfy enraged public rather than a system to keep things under control.

Such administrative measures do have some utility, but only up to a point. Beyond that point, market forces take over.

To keep things under control, the government needs to identify deeper causes of the issue, i.e. production patterns, a weakening rupee, ever-increasing oil prices taking freight charges higher and higher, and double-digit inflation.

A national vegetable policy is required that identifies potential production areas in different ecological zones across the country and comes up with a production plan

Take the example of tomato, which has come to symbolise the current spike and has caused much embarrassment to the government after Advisor to the Prime Minister on Finance Dr Abdul Hafeez Sheikh put the price at Rs17 per kilogram, when market was selling at Rs250 per kilogram.

During November and December, Pakistan’s tomato requirement is met from the rain-fed areas of Khyber Pakhtunkhwa and Balochistan. Being weather-dependent crop, tomato’s yields are naturally low, creating a huge gap between inelastic demand and fluctuating supplies during these months.

This was particularly a bad year for such essential commodities, as heatwaves affected the crop. The freight factor also came into play, as the areas where tomato’s crop is grown are quite far from demand centres like Lahore and Karachi.

With diesel now costing over Rs130 per litre, even a small vehicle costs well over Rs100,000 to bring goods to urban centres. The entire transportation cost is thus shifted to commodity, which, in most of the cases, is higher than the commodity itself.

However, the downtrend is seasonal. Two months down the line, when massive yields from the irrigated areas of Sindh and Punjab hit the market, the pendulum would swing to the other extreme.

Prices, on average, would drop by 60 to 70 per cent and the farmers from these areas would be found full of complaints about low prices. But these two months are enervating enough for everyone to drive them over the edge.

Right now, garlic and ginger prices have two additional factors: rupee’s devaluation and official love for taxes in every form, regardless of social cost.

Currently, both vegetables are imported from the Far East (mainly China and Thailand), costing $1,000 per tonne (garlic) and $1,100 per tonne (ginger).

On the devaluation head alone, the price has gone up by 35pc in the last 18 months.

“Add customs duty of Rs75 per kg to the devaluation differential and the current spike is hardly hard to understand,” argues Khalil Bhatti, an importer from Lahore.

In case of garlic, the current price trend is likely to hold until the end of April when the local crop joins the market, he suggests, and warns: “In case of ginger — being an imported crop — no such relief can be seen unless the government does away with massive duties.”

The case of onion is even more curious. Despite soaring prices within the country, Pakistan has so far exported 33,006 tonnes (mainly to the Gulf region, Europe and Bangladesh) this season to maximise export figures and earn foreign exchange.

“The country is up in arms because of ever-increasing onion prices, which has seen a rise of around 35pc in the last few weeks, and the government has allowed unhindered export,” laments Muhammad Ramzan, an onion trader from Lahore.

He fears that the country would shortly be importing onion and losing whatever foreign exchange gain it made in the first place.

Pakistan needs to realise that most vegetables are seasonal, perishable items that suffer high harvest losses and travel across the country at different times of the year. Their production cycles are particularly vulnerable to climate, and even a smaller variation in yield spells trouble throughout the country, as happened in case of tomato this year.

That is precisely why the country needs, as suggested many times earlier, a national vegetable policy, which documents requirement of each one of them, identify potential production areas in different ecological zones across the country and come up with a production plan.

The policy should also include early warning systems to raise alarm when a crop fails in any part of the country and take corrective measures.

This year, tomato crop partially failed due to heatwave, but no one rang the bell. Instead, people realised the failure through price spike rather than an official warning system.

Unless, we have such a policy in place, varying vegetables yields and prices would continue to create political problems for the government and financial troubles for common man.

Published in Dawn, The Business and Finance Weekly, November 18th, 2019


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