LAHORE, Aug 1: High inflation rate and the collapse of governance at the retail level have taken prices of fruits and vegetables out of reach of ordinary customers. And periodic shortages, sometimes artificial, only worsen the situation.

According to the stakeholders who spoke to Dawn on the price fixation mechanism here on Tuesday, though a host of factors were responsible for high prices, inflation and poor governance had overshadowed everything else.

Theoretically speaking, the general rule of demand and supply ruled the market but inflation and absence of any check on prices at the retail level had put everything topsy-turvy, they said.

“Apparently, the demand and supply combination sets the price in the wholesale markets and it is then translated into retail price with a reasonable profit margin,” says Mian Muhammad Arshad, a middleman at the Kot Lakhpat vegetable market.

He said the high rate of inflation had increased prices of everything: inputs, transportation, handling and packaging. It created a speculative pressure on price and the market condition where every one wanted to make maximum money because of uncertainty.

This exploitation, however, favoured traders and put farmers at a disadvantageous position: the traders press farmers to sell their produce at a cheap rate because they lack information about rates in other markets. “For example, the farmers from Lahore hardly know rates of potato in Okara market. They bring produce in market with a heavy transportation cost and cannot afford to go from market to market in search of better price.

“Thus neither farmers are quality conscious nor have markets any mechanism for grading the produce; the former suffer exploitation on the account of quality as well,” he said, adding that unless the government based price on quality and wove it into fruit and vegetable trade, the farmers would continue to suffer.

When tomatoes were sold in Lahore market at a cost of Rs80 per kilogram last year, the farmers were hardly getting Rs30 per kg owing to market manipulation.

“With cartelisation creeping into almost every area of economic activity, even the demand and supply rule is rigged by some traders,” lamented farmer Muhammad Wasif.

He said the farmers, who sell their produce in the field, got peanuts compared to the wholesale price, leave alone the retail level. It was also because the farmers did not separate the quality produce and tried to sell everything they get from the field. They were also forced to sell immediately as they did not have “holding capacity”, he said.

“The traders in big markets have huge storages and can hold vegetables and fruits for days. This put traders, not farmers, in charge of supply. Since demand of most of the vegetables remains constant, supply fluctuations determine the price where these traders played a decisive role, making it easier to form cartel and manipulate market. That is why even imports of horticulture products from India cannot ease market any big way. The price of garlic and onion is a case in point,” he explains.

Mian Latif of the Ravi Road vegetable market said the government did not ensure supply of products by calculating consumption well in time. It woke up to a situation when crisis was already created, and started importing. During the last one year, Pakistan had imported food items of over Rs100 billion. These items included garlic, onions and apples, he said.

“The artificial price increase does not end with rigging of wholesale markets but is rather dwarfed by what happens at the retail level,” says a former official of the Lahore Market Committee. The wholesale markets are easy to control should the government decides to do so because of fewer people selling huge quantities, but the retail level is turning out to be a disaster as far as price escalation is concerned, he notes.

It is also because thousands of vendors take produce from these markets and spread around the city. They are not easy to control. There is also no way to inform the public about the markets rates. This gives these retailers a total monopoly over price fixation. In most of the cases, these retailers only follow the general trend but fix their own prices according to their cost of living.

He says the new set up after devolution lacks a price control mechanism allowing the retailers to make the most of the situation. Since the cost of living has gone abnormally high in the country, these retailers try to make their living out of whatever they sell.

They get three to four times more profit than the market price. “Today mangoes were sold at a rate of Rs25 per kg in Kot Lakhpat market but are ranging between Rs50 and Rs60 per kg at the retail level.

“The government cannot control big traders as they are influential politically and financially and it cannot control retailers because they are too many.”