Prime Minister Imran Khan recently admitted his government’s failure to keep the prices of flour and sugar in check. Soon after that, his tweet regarding the possible fall in vegetable prices made newspaper headlines.

The prime minister and his cabinet members seem determined to bring down the rising cost of living by using an iron hand for their dealings with market mafias and hoarders. The Federal Investigation Agency has been tasked to check wrongdoings that pushed up wheat flour and sugar prices.

Consumers are surprised over the government’s late wake-up call on the burning price issue. They believe the government wants to take credit for bringing down prices when supply improves owing to Sindh’s wheat crop arriving in mid-March and Punjab’s crop hitting the market in mid-April.

The prime minister and his team were nowhere in sight when the flour millers triggered the price surge from April 2019 till January 2020, taking various flour prices to Rs60-75 per kg from Rs33-35 per kg. Blaming the non-procurement of wheat by the Sindh government in 2019, they said they had to purchase costly wheat from the open market.

How can consumers forget they had to pay Rs400 per kg for tomatoes, followed by Rs500 per kg for chicken meat, Rs120 per kg for onion, Rs320 per kg each for mash pulse and capsicum, Rs80 per kg for sugar and Rs260 per kg for mung daal?

The sole reason for the declining price of vegetables is the arrival of new crops and not a fear of crackdown on hoarders and market mafias

Ghee and cooking prices appreciated by Rs50-60 per kg/litre in the last few months while loose milk’s price rose to Rs120 from Rs94. Bread makers increased prices by 17 per cent in mid-2019. Tea prices witnessed a Rs100 per kg jump in the last seven months.

Now the price of tomatoes has declined to Rs30 per kg and retailers offer three to four kilograms for Rs100. Onion’s price hovers between Rs60-80 per kg, followed by wheat flour price at less than Rs50 per kg owing to the plunge in wheat price to Rs3,800 per 100 kg bag from Rs5,300 a few months back because of improved supplies from the Sindh government to the mills. In April 2019, a wheat bag was available at Rs3,000. Prices of other vegetables like carrots, peas, cucumbers, capsicums, ridge gourds, bottle gourds, cabbage etc are lower now than the last quarter of 2019.

The sole reason for the declining price trend is the arrival of new crops and not the fear among traders and mafias over reports of a crackdown on hoarders, commodity investors and stockists. If the fear was really there then the price of sugar, produced by both the government and opposition members, would have dropped down by a big margin. As per the official figures, sugar production in December 2019 showed a 97pc jump to 1.093 million tonnes from 554,544 tonnes in the same month in 2018.

Multinational companies and other manufacturers enjoy a free hand in pushing up prices, as made clear by the soaring rates of ghee/cooking oil, powder milk products, tea, bread, confectionery and bakery items, etc. Tetra milk producers recently pushed up prices to Rs200 from Rs180 on 1.5-litre packs, Rs150 from Rs140 for a one-litre carton and Rs38-40 from Rs35 on the 250ml pack.

The government has also failed to keep a strict vigil on the stocks situation, the import price of commodities, massive differences between wholesale and retail rates, ineffective price monitoring campaigns by the city governments and illegal inter-city movement of wheat and flour. Manufacturers push up prices on exchange-rate parity. If the government had gathered these statistics, it would have been easy to deal with them to avert food inflation.

Manufacturers spiked prices citing rising transportation costs owing to higher diesel prices, devaluation, new taxes and duties, tax rates on filers and non-filers etc. However, the government never accounted for the falling import prices of some commodities that could have given them an upper hand in dealing with manufacturers.

The average unit price (AUP) of tea imports in the first seven months of 2019-20 was $2,379 per tonne as compared to $2,649 per tonne for the same period in 2018-19. Similarly, the AUP of palm oil was $568 per tonne against $613 per tonne last year.

A marked decline was recorded in AUP of pulses to $489 per tonne in the first seven months of 2019-20 from $545 per tonne. Similarly, the AUP of spices fell slightly to $1,126 per tonne from $1,136 per tonne.

Former chairman of Pakistan Vanaspati Manufacturers Association (PVMA), Sheikh Amjad Rasheed said global palm oil prices had dropped in the last two months and 90pc mills were passing on the decrease in costs by lowering prices by Rs5-7 per kg/litre for ghee and cooking oil.

Patron-in-chief of Karachi Wholesalers Grocers Association Anis Majeed said world pulses prices had dropped because of which wholesalers had reduced prices by Rs10-20per kg. However, the price reduction has not been passed on to consumers with retailers making higher profits by charging Rs40-70 per kg which is unjustified.

In contrast, retailers believe that wholesalers have not passed on the full benefit of the massive drop in prices in the world market. They have also not passed on the decrease in costs as a result of rupee gaining value in the last seven months. One dollar is now equal to Rs154-155 as compared to Rs164 in June 2019, which indicates a decline in import costs.

General Secretary of Karachi Retail Grocers Group Farid Qureishi, while giving an example of the free ride that multinational companies get, said the government is least concerned about checking the frequent price hikes by tetra and powdered milk manufacturers, tea manufacturers, biscuit and chocolate makers. He said these manufacturers have reduced the weight of their products but kept on increasing prices which has also gone unnoticed by the government.

President Falahai Anjuman Wholesale Vegetable Market Haji Shahjehan expressed surprise over the prime minister’s tweet on falling vegetable prices. He said, “vegetables are perishable items and their prices are based on demand/supply and crop situation; their prices are not falling due to the government’s effort.”

Take tomatoes as an example. Their wholesale price is now Rs10 per kg, causing sleepless night to growers. However, this price had swelled to over Rs300 last year and consumers were paying Rs400, he said, adding that almost all vegetable crops are now in full swing, resulting in a drop in prices.

“Vegetables are perishables and cannot be stockpiled for longer periods. The government should check the hoarding and prices of solid food items like sugar, pulses, wheat and wheat flour etc,” he added.

The city government’s role as regards checking is confined to making price lists rather than the implementation of the said lists. Hardly any retailers display price lists, terming it unrealistic.

Traders feared magistrates during Musharraf’s era but now they sell on their own terms. At the end of every day, the city government imposes a paltry amount of fines and imprisons traders in a few areas but these efforts have yet to provide any price relief to the masses.

This is the area where the federal government should have focused more.

For example, the city government has less than 100 officials to check profiteering in 18 towns of Karachi. Even 500 officials would be too few to cover megacity markets. With limited officials, the price checking exercise becomes more futile during Ramazan, forcing consumers to pay more than double the price of fruits.

Published in Dawn, The Business and Finance Weekly, March 2nd, 2020