Price control, supply of essential food items: CCP moved to form body for implementation of recommendations
The Ministry of National Food Security and Research has approached Competition Commission of Pakistan (CCP) under the directions of National Price Monitoring Committee to constitute a committee for implementation of recommendations prepared by the CCP regarding price control and supply of essential food items. Sources told Business Recorder here on Tuesday that the CCP is coordinating with the Ministry of National Food Security in this regard.
The NPMC, in its meeting held on September 6, had issued these directions to Food Ministry after the CCP Chairperson Vadiyya Khalil briefed the Committee members on the CCP's recommendations to deal with issues of price hike and hoarding of essential food commodities. Chairperson Khalil shared both long term and short recommendations offered by CCP in its Policy Note to the federal as well as all the provincial governments.
However, she urged the NPMC to consider the immediate implementation of the proposed uniform formula for price determination throughout the province to discourage suppliers from hoarding and delivering supplies to places where better prices and margins are available.
Under this formula, price controls on essential commodities as well as the food stuffs should be applied at the wholesale level which can be monitored easily as compared to the vast retail sector, given the fact that wholesalers are located in mandis (markets) and have relatively uniform operating cost. "Rather than recommending a 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. Basic quality standards should be identified i.e. the minimum range/band in the price would be for average quality and the maximum range/band could be for higher quality," suggests the formula.
Sources said that all the NPMC members present in the meeting appreciated the innovative solutions provided by CCP. Therefore, the food ministry was directed to constitute a committee of all stakeholders to immediately implement the CCP's recommendations.
Meanwhile, a meeting of the Sub Committee of Standing Committee on Finance, Revenue, and Economic Affairs was held on September 20 to "recommend measures for controlling inflation" in which the CCP Chairperson was also invited to attend. The Chairperson was asked to give a presentation on its Policy Note in the next meeting of the Committee.
The CCP had 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 was 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 was issued pursuant to 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 Ramadan.
Although the prices should be determined through normal market mechanism i.e. supply and demand, however, 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.
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.