CCP recommends measures to promote efficiency in the value chain of 10 food products
ISLAMABAD (Dunya News) – The Competition Commission of Pakistan (CCP) has completed a study project aimed at addressing market distortions and promoting efficiency and competition in the value chain of ten essential food commodities, including onion, edible oil and ghee, potato, poultry, wheat, sugar, milk, rice, tomato and pulses. These products make up 63% of an average household’s monthly food expenditure.
Double-digit inflation in Pakistan since November 2021 has prompted the Economic Coordinating Committee to capture food inflation and the CCP has been tasked by the National Price Monitoring Committee (NPMC) to examine the reasons for the increase commodity prices.
The CCP shortlisted 10 major food items from the Sensitive Price Index (IPS) list of 51 essential commodities for the study, according to a press release issued here on Saturday.
The CCP shared the study draft and held consultation sessions with stakeholders including representatives from Ministries of Agriculture and Food, Research Institutes and other relevant departments in Punjab, Sindh and Khyber Pakhtunkhwa.
PCC Chairperson Rahat Kaunain Hassan and her team, including member Mujtaba Ahmed Lodhi, and other senior officers held fractious discussions with stakeholders on the study’s recommendations.
The session with Balochistan stakeholders will take place next month. After collecting feedback from stakeholders, the study will be finalized with consolidated recommendations to the Government of Pakistan to address market distortions and ensure the efficiency of the value chain for these products.
The ten products mentioned above combined showed a 35% price increase in July 2022 compared to July 2021. The largest price increase of Masoor (92%), Onion (89%), Oil edible (77%) and gram (52%) was observed during the same period.
The study describes the underlying causes of price hikes and supply chain problems, including inappropriate policies and regulations that distort markets, hinder competition and discourage private investment, in addition to diminishing efforts to promote research, innovation and the use of technology to improve crop yield and productivity.
In its recommendations, the study urges that government policy shift from the current major crops of sugar and wheat to other equally important crops with export potential such as pulses, other cereals, seeds oilseeds and vegetables.
To solve the problem of inefficiency due to low yield, he recommends taking R&D initiatives in high-yielding varieties and intervention of the Federal Seed Certification and Registration Department, provincial agricultural extension departments , seed development departments to develop a dissemination mechanism for high-yielding seed varieties. , R&D on high yielding crops, raising awareness of high yielding seeds and genetically improved crops and their cultivation.
The study recommends a complete overhaul and an increase in the number of the 345 agricultural produce markets (APM) in Pakistan, public and private (cereals, fruits and vegetables).
The study notes that protectionism through export/import bans and tariffs constitute a barrier to entry for traders wishing to access international markets. For example, the protection of wheat and sugar against imports by a customs duty of 60% and 40% respectively not only leads to higher prices for domestic consumers, but also does not encourage investment in varieties with higher yield.
The study highlights that agricultural finance is a prerequisite for an efficient agricultural sector. It recommends farmers’ increased access to finance for all types of crops and production areas. High mobile penetration with 88% of the population having internet/broadband access, agricultural e-commerce has great potential and therefore, it recommends the government to develop an agricultural e-commerce ecosystem and educate farmers on agricultural e-commerce opportunities.
The study recommends the government to promote contract farming, which will lead to economies of scale and agricultural mechanization, strengthen the farmer-processor relationship, improve access to finance for both processors and farmers, and will also benefit banks/DFIs by reducing the cost of doing business and post-disbursement monitoring.
While emphasizing the importance of storage for food security, the study recommends the government to make adequate arrangements for the storage of wheat, rice, pulse seeds and oilseeds. To avert food security crisis and food price volatility in the context of floods in Pakistan, Strategic Grain Reserves (SGRs) can be a useful policy tool where targeted disbursement is made to people in the need.
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