The grower does not always make money when the prices of food items go up, said Sindh Abadgar Board senior vice president Mahmood Nawaz Shah here on Thursday.
Speaking at a seminar on food inflation at the Institute of Business Administration (IBA), Mr Shah blamed skewed policies and poor storage infrastructure for wild swings in retail food prices.
Pakistan imported food items worth $7.5 billion in the first 11 months of 2020-21, up 54 per cent from a year ago. Food imports constituted more than 15pc of total imports in the same period.
Mr Shah said half-built silos are lying idle in Karachi but the Sindh government is not making them functional despite a severe shortage of storage infrastructure.
“There’s 10-hour loadshedding in rural areas, but the ministers say on TV they’ve eliminated power cuts across the country.”
Speaking at the seminar, Cargill Pakistan’s country head Imran Nasrullah said his firm, one of the biggest food traders worldwide, recognises Pakistan as a food-deficit nation.
Referring to the water-intensive sugar-cane crop, he said misplaced government policies in the agriculture sector have led to a depletion of national resources.
He said his company is helping the stakeholders make warehouse receipts a tradable instrument with a secondary market on the country’s only mercantile exchange. “It’ll unlock a lot of potential as farmers will be able to buy better seeds and equipment,” he said.
IBA Executive Director S. Akbar Zaidi said the rupee witnessed around 40pc devaluation in the last few years, which made food imports more expensive.
Year-on-year food inflation in urban and rural areas in June was 11pc and 9.8pc, respectively.
Responding to an IBA student who asked why food inflation continued to rise and touched 23.8pc in rural areas in January 2020 though the SBP had jacked up the policy rate to 13.25pc, Dr Zaidi said the interest rate has “nothing to do” with inflation. “I don’t know who teaches you economics, that too at IBA.”
Taking part in the seminar from Islamabad via Zoom, Additional Secretary for Federal Ministry of National Food Security and Research Rashid Mahmood Langrial said administrative measures can help solve small problems, but can’t fix market distortions in the agriculture sector.
“The government is building strategic reserves of key commodities. It’ll ensure price stability by releasing these reserves into the market if prices go up significantly.”
He said a majority of the rural population is landless, which means they’re equally affected by food inflation. “The government is making $1.7bn investments in agriculture in the next three to four years,” he said.
He drew the attention of the panellists towards the high economic potential that shrimp farming in saline land has to offer. “It can generate enough foreign exchange in 10 years to cover the import bill of palm oil.”
In response to a question, he said the prices of key commodities cannot be left entirely up to market forces. No government can sustain the public backlash if the prices of staples surge astronomically, he added.