The Competition Commission of Pakistan (CCP) has strongly recommended all four provinces to establish agriculture supermarkets, apply uniform formula for price determination throughout the provinces, employ minimum support prices (MSP) mechanism to incentivize farmers, provide tax incentives to promote food processing and cold chains and exempt hyper/super market from application of price control law.
The CCP has issued policy notes to all the provincial governments, making important recommendations and providing innovative solutions, including the introduction of uniform price determination formula, to deal with the issues of hoarding and price hike of essential food items. One of the most important recommendations is to urge the provincial governments to update and consolidate the laws relating to essential commodities, food stuffs, agriculture produce markets and godowns registration into a single legislation and the establishment of a single authority at the provincial level to deal with the issues of hoarding and price hike of essential food items.
The Policy Note emanates from the CCP's Report on the "Review of Framework Relating to Control of Pricing & Supply of Essential Food Commodities" which was the result of extensive consultation with the stakeholders and market research done by the CCP in 2015.
While referring to Article 38 of the Constitution of Islamic Republic of Pakistan, which binds the state to ensure the provision of food and basic necessities along with other social and economic benefits to its citizens, the CCP noted that although all the four provinces have implemented different laws for price control, however, these laws lack effectiveness in checking price hike and hoarding of essential commodities & foodstuff. Resultantly, the consumers keep suffering from high prices and shortages of essential food items, particularly during Ramazan.
Although the prices should be determined through normal market mechanism i.e. supply and demand, yet the CCP while keeping in view the welfare of consumers, has recommended that the new consolidated law should provide for a uniform formula for price determination throughout the province. This will discourage suppliers from hoarding and delivering supplies to places where better prices and margins are available. Further, the price control mechanism should only be enforced in cases of emergency or shortages.
The policy note further recommends that the price determinations should be made on wholesale basis and instead of single price for one commodity, it is recommended that the price determinations be made with reference to quality of commodities through range/band of prices.
Furthermore, the CCP has suggested that the price controls on essential commodities as well as the food stuffs should be applied at the 'wholesale level' for better monitoring as compared to the vast retail sector. And rather than recommending a single price for one commodity, the price determination should be made with reference to quality of commodities through range/band of prices. In order to minimize the role of middleman and to give better returns to farmers, the CCP has recommended to establish 'agriculture supermarkets' on public private partnership where farmers can directly display and sell their products.
Moreover, the Minimum Support Prices (MSP) mechanism should be employed to incentivize farmers to cultivate crops that are likely to be in high demand in the future but are currently facing low prices and charges. In order to reduce the wastage of perishable commodities, food processing and allied industries should be encouraged including cold chains.
The policy note also suggested that the new price control laws should not be applied on hyper/super market as they bring foreign investment and most of these stores implement a modern agriculture supply chain under which perishable items are transported and stored in a temperature controlled environment.
The policy note has been issued under Section 29 of the Competition Act, 2010, which empowers CCP to review policy frameworks and laws to foster competition in all spheres of economic and commercial activity and to suggest legislative changes to the federal and provincial governments.
Comments
Comments are closed.