KARACHI:
In the last two years, food prices have soared drastically in Pakistan, which has fuelled concerns over the rising cost of living. One of the reasons for the rising food inflation is the implementation of stabilisation policies aimed at regulating the fiscal and current account deficits. We cannot expect food prices to remain stable when everything else is becoming more expensive because of government policies or market dynamics.
In addition, the pandemic led to disruptions in the food supply chain and raised input and transportation costs for farmers, which compelled farmers to raise selling rates to recover costs. The reduction in the output of minor and major food crops, particularly wheat, and an increase in demand since the outbreak of the virus created a supply gap in the country. This led to a further increase in prices because the government failed to predict the market and make timely arrangements to fill the gap through imports.
One solution lies in developing the capacity to predict both domestic and global food commodity markets. This will help in addressing supply chain disruptions and cover shortages through early imports. Long-term food price stability depends on the government’s willingness to revamp agricultural policies, liberalise the trade regime by allowing market forces to freely play their role, reduce costs of farm input, invest in high-yield and drought-resistant seed technologies, and give growers incentives to adopt modern farm practices to increase yields. To stabilise food prices, crop output will need to be increased.
Ahsan Murtaza
Islamabad
Published in The Express Tribune, February 5th, 2022.
Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.
