PRICES of vegetables and pulses had started crawling up even before monsoon rains in some parts of the country. With rainfall becoming more widespread and dense, these prices are expected to rise further.
In coming weeks, prices of perishables and other commodities can also rise sharply in response to a 34 per cent and 26pc increase in the prices of petrol and diesel announced on June 25. In the week ended on July 2, retail prices of LPG cylinders had also risen 5.5pc, according to the Pakistan Bureau of Statistics (PBS).
PBS data shows that during the week that ended on July 2, average national retail prices of potato, tomato and moong, mash and masoor pulses shot up by 76pc, 65pc, 55pc, 39pc and 28pc, respectively, on a year-on-year basis. In urban markets of Karachi, Lahore and Islamabad that are far from farms and fields and where demand remains strong, the percentage increase in the prices must have been higher compared with rural Pakistan.
Prices of perishable food items, including fruits and vegetables, see greater fluctuations than other commodities for various reasons. Two of them are very obvious: their shelf life is short and demand swings wildly.
The provinces have not made enough investment in agriculture after its devolution in 2010-11
But mitigating these two factors is not that easy. To make sure that fruits and vegetables reach consumers immediately after harvest requires investment in marketing infrastructure.
Keeping the production cycle in harmony with changing demand needs policy intervention to strike a balance between affordability and production incentives.
In Pakistan, prices of perishables remain erratic almost throughout the year. Prices move both ways quite wildly — sometimes making certain vegetables and fruits out of consumers’ reach and sometimes forcing producers to sell them at throwaway prices. Reasons for the country’s failure to keep price fluctuations within a reasonable range are diverse and rooted in our archaic farming practices and complex and least organised agricultural marketing systems.
Maintaining a certain degree of stability in the prices of perishables is not possible in the absence of a comprehensive policy on the production of vegetables, pulses and fruits. The Federal Committee on Agriculture (FCA) routinely fixes targets for the production of minor crops but the provinces seldom meet them: they remain focused on politically sensitive key crops i.e. wheat, sugar cane and cotton. What is more worrisome is the fact that instead of promoting practices to ensure enough production of minor crops, the provinces leave it up to farmers.
That, coupled with the vagaries of weather and the financial viability of a certain minor crop, results in erratic production volumes of vegetables and pulses. The absence of price projections for minor crops also makes it difficult for farmers to increase their output. The resultant low production, coupled with inappropriate storage facilities, naturally lead to an increase in prices. Besides, the recurrent gluts of certain vegetables, most notably tomatoes, have made farmers cautious with cultivating minor crops.
The productivity gap hits farmers of minor crops as well. For example, per-hectare production of tomato in Pakistan is far lower than that in other countries.
According to a 2015 Food and Agriculture Organisation study, Pakistan produced just 566,000 tonnes of tomatoes at 60,700 hectares of land whereas Portugal harvested 1.9m tonnes of the vegetable from just 20,000 hectares. Part of this huge gap in productivity could be attributed to an estimated 40pc on-farm crop loss owing to improper storage and transportation facilities.
Apart from issues in production, Pakistan’s market infrastructure of perishable items is too complex and inefficient. At least half a dozen players get involved when it comes to producing a vegetable, pulse or fruit and taking them to consumers. Between growers and consumers, harvest investors, pre- and post-harvest commission agents, wholesalers, semi-wholesales, transporters and retailers have a role to play. And since each one of them charges their own margin for the services they offer, the end price of perishables is inflated at each stage.
After the devolution of agriculture to a fully provincial subject from 2010-11, the provinces have not made enough investment in agriculture on the whole — let alone in promoting the production of minor crops and their marketing. This is evident from the paltry allocation they make every year for agriculture. And a major chunk of even that small allocation is spent mostly for maintaining a largely inefficient bureaucracy tasked with taking care of agriculture.
In the post-pandemic world, rapid gains made in e-commerce and e-marketing have raised hopes that the number of stakeholders in the production-to-retail marketing of perishable goods will finally be reduced. If that happens, and indications are that it is going to happen sooner or later, a semblance of stability can be achieved in the prices of perishables. But even this cannot happen without fuller implementation of the rules related to administered prices of essential items.
Multiplicity of laws governing these prices and the provinces’ failure in empowering district governments may continue to delay the emergence of an effective system to monitor the prices of essential items, including perishable food. A lack of harmony among the federal government, the all-powerful establishment and the provinces also denies space for provincial governments to make long-term policies, including those for agriculture. — MA
Published in Dawn, The Business and Finance Weekly, July 13th, 2020