Anecdote has it that purchasing power and as a result, consumption of most items has gone down in the past 12-18 months. That appears true in a lot of cases – with a few exceptions in the food category. Tea, pulses, and palm oil –have all registered the highest import quantities ever for the July-October 4-month period. Some would pin it on reduced prices from a year ago in case of pulses and palm oil. But that does not quite explain the immense resilience shown by the three food import categories – when everything else has gone south.
Palm oil prices in the international spot market have stabilized over the past quarter –staying in a close range of +/-2-3 percent. The market seems to have found equilibrium around current levels – reverting to the 5-year historical average – having skyrocketed last year. Malaysia and Indonesia both relaxing the export quotas have eased the supply situation – and the demand from India, the biggest consumer, is only growing moderately – keeping prices range bound.
For Pakistan, the quantity of imports at 1.1 million tons for 4MFY24 is 7 percent clear year-on-year – and highest for any Jul-Oct period in recorded history. Retail prices have come down significantly in the fiscal year to date, but 4MFY24 average retail cooking oil price at Rs597/kg is still slightly higher than the same period last year.
It appears that the much talked-about crackdown has on smuggling of goods to and from Pakistan has fizzled out. In case of palm oil, it is highly likely that the efforts never really yielded significant results – as monthly numbers remain high. It does not take a rocket scientist to see how Afghanistan’s official palm oil imports are next to nothing. Afghanistan is not a small country by any means, and even accounting for differences in eating culture –rampant smuggling of palm oil into Afghanistan is the likeliest of explanation.
Shortcomings in terms of border control have led to colossal losses both in terms of precious foreign exchange, and tax revenue, over the years. It will never be too late to put the house in order and stop the leakage, for the poor consumer has been paying the cost for way too long in the form of taxes, and inflation.
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