Governments continue to struggle in their bid to keep essential food items affordable for everybody
air and regulated retail food prices and consistent grocery supplies of essential items play a crucial role in protecting the masses from the detrimental effects of inflationary pressures in a developing country like Pakistan. Even in developed countries and high-end markets of affluent nations, regulatory measures are taken to ensure that staples such as flour, vegetables, pulses, meat, dairy and sugar remain affordable throughout the year. Where the regulators succeed, food is readily available to all consumers at reasonable rates.
Essential food items continue to be supplied at reasonable prices, for instance, in the Gulf nations as well as countries like the United States and the European Union. Despite implementing a liberal market mechanism, these economies have implemented limited price controls to ensure that these food staples remain affordable. Middle Eastern countries are also committed to keeping the cost-of-food hikes at bay to maintain a decent standard of living, particularly for those who struggle with affordability issues. Recently, the United Arab Emirates (UAE) introduced a new policy to regulate the prices of nine essential foods. The initiative covers bread, wheat, rice, cooking oils, milk, sugar, legumes, poultry and eggs, ensuring that the prices of these items remain stable.
Despite having a relatively small farming sector, our western neighbour, Iran, ensures the distribution of food items at affordable prices throughout the country. Even imported items are priced reasonably. Smuggling of these food items into Pakistan through Balochistan is evidence of this. In addition to the influx of petroleum products into the Pakistani market, low-priced cooking oil and dairy products, including liquid milk, have been informally traded in the domestic market. This indicates that Pakistani food items are either expensive or in short supply.
During one of my visits to Balochistan, I was surprised to find that most of the grocery items in the Turbat market had been smuggled from Iran. One of the vendors informed us that Pakistani flour and sugar rarely reached this part of the country.
The country’s unstable supply of food items arises from several factors, including poor logistics due to connectivity issues such as high transportation costs, inter-provincial bans on transportation, low farm production, and food subsidy schemes for select individuals. The expenses of transporting these items to remote areas are too high, not only due to the high fuel cost for transportation by road but, more importantly, the need for feasible rail connectivity.
In India, a neighbouring country to the east, several layers of social protections have been put in place to enable poor population segments to live food-secure lives. For example, the Indian government has announced that from January 1, 2023, it will provide food grains free of cost to 81.35 crore beneficiaries, including the poorest of the poor. Roughly sixty percent of the total population, eligible for free food grains such as wheat, rice, and coarse cereals, is being targeted in this coverage.
The Indian food ministry has announced a ‘zero price’ policy for distributing food grains to all beneficiaries from January 1 to December 31, 2023. This initiative involves a food subsidy of more than 2 lakh crore Indian rupees for the year 2023, providing about 5 kg of food grains per person per month for the priority household category and 35 kg per family per month under another scheme. In addition, the distribution of free grains will ensure uniform implementation under the ‘One Nation One Ration Card’ program across the country.
Other measures for ensuring low prices of food items in India mainly stem from the significant subsidies given to farmers, which help lower the costs of commodities for end-users.
The failure of price control measures further burdens the low- and middle-income people in diverse ways. The problem has grown chronic and there is no solution in sight.
In contrast to other parts of the world and the region, Pakistan has an inconsistent and patchy food regulation mechanism that primarily focuses on the Punjab province. The agrarian economy of a country like Pakistan should be able to provide food for its people. However, the acute challenges of food shortages and high costs have wreaked havoc on the country’s food security. Nowadays, every household has to deal with the day-to-day challenge of spiralling food prices. Unfortunately, the situation has worsened in two ways: the diminishing buying power and record-high prices of essential food items have made life miserable. This situation is more complicated in low-income provinces due to varying living standards. Simply put, making both ends meet has become even more challenging for many. It is increasingly becoming impossible during these tough times of ever-increasing inflation and squeezing incomes.
The dream of implementing fair food prices for all has yet to be realised. The latest scheme announced by the federal government for the free distribution of wheat flour to eligible consumers has been designed to cover only the targeted population in the Punjab and Khyber Pakhtunkhwa provinces. The rest of the country will not benefit from this scheme for one reason or another. The biggest culprit in this regard is the liquidity crunch, which has pushed the governments of Sindh, Balochistan, Gilgit Baltistan and Azad Kashmir out of the race. To fill the gap, the Sindh government has announced a subsidy of Rs 2,000 each to 7.8 million low-income families for wheat flour. The amount will be paid to those with an income of less than Rs 50,000 per month instead of the Rs 60,000 limit announced by the federal government for the Punjab and the KP.
The federal government’s free flour scheme, implemented under the Ramazan Package, has raised questions of sustainability. Although the current scheme provides only wheat flour to eligible recipients, it is significant in that flour accounts for approximately 70 percent of daily caloric intake in the country. To ensure transparency, it may be a good idea to use CNIC as a basis for all such schemes. Lack of transparency is a major reason for the long queues at free flour distribution sites. Scanning chip-based CNIC with a handheld device can ensure fair distribution of free flour.
The policymakers should also consider distributing whole grains instead of flour. This can help prevent large-scale pilferage of subsidised wheat by flour mill owners with the connivance of Food Departments. This will help plug some of the loopholes in the scheme. Also, if it is committed to providing some solace to the poor, the government should consider including tandoors and bread-making units in its subsidised or free flour coverage throughout the country. Such an initiative can help lower the prices of tandoori roti and bread. The prices of these essentials have doubled over the last couple of years. Without such an intervention, the daily caloric intake based on wheat flour could be greatly altered, leading to food insecurity in the country. Uniform coverage for the destitute in all parts of the country is desperately needed.
Several factors, including interventions at pre- and post-harvest stages, affect the prices of edible items. The emphasis should be on introducing measures to keep the retail prices of essential foods, including wheat flour, vegetables, pulses and meat, in check. An increase in domestic production of grains, pulses and vegetables is the need of the hour. To achieve this purpose, the growers’ cost of production should be brought down.
The failure of price control measures further burdens low- and middle-income people in diverse ways. The problem has grown chronic and there is no solution in sight. The fundamental flaws in the pricing and distribution of essential food items have been the root cause of high prices and their non-availability. The difference between the wholesale and retail prices of vegetables needs to be revised upward to ensure their availability at the notified prices. The 5 percent profit margin allowed on perishable items currently is too low. Realistically, it should be around 15 percent.
The writer is a senior reporter at The News International