Daily Times

By Javed Akhtar

Persistent surge in food prices has produced multiplied difficulties even for the middle-class in Pakistan where people spend a major portion of their income on food, with the costly petrol, electricity, and direct/indirect taxes making a big hole in their savings.

According to the Pakistan Bureau of Statistics (PBS), the average inflation rate was recorded at 8.58% in July-Sep 2021 compared to the same period of the previous year. Monthly statistics in September show a 2.12% increase in the inflation rate compared to the month of August.

There are several factors responsible for food inflation, like food trade deficit, massive growth in population, increase in the cost of agriculture over the past two years, and last but not the least, climate change.

Since 2019, food inflation in Pakistan has remained at double digits, and the recent pandemic has been a major contributing factor. Increasing global food commodity prices have also played their role.

According to the Food and Agriculture Organization (FAO), the Food Price Index (FPI) averaged 127.4 points in August, which is higher than the 3.1% increase in the previous year.

But looking at the food inflation, it’s crucial to keep two factors in mind: first, the trend of FPI, and second, whether a country has a food trade imbalance. Higher domestic food inflation is unavoidable if FPI rises and the country’s food trade imbalance grows. As a result, Pakistan’s high food inflation is comprehensible.

While examining the impact of imported food inflation in a country, this point should not be overlooked. If the country is a net importer of food, its effect will be greater. Unfortunately, Pakistan faced $3.954 billion food trade deficit in 2020-21 (from July 2020 to June 2021), up from $817 million in 2019-20 and $1.061 billion in 2018-19, according to the PBS statistics.

Pakistan is the sixth largest country in terms of population, due to which it is not easy to meet the food demand of such a big population. The multiplier impact of population increase is a serious concern because it can worsen the economic conditions of the country.

As the country’s resources are limited, the government has to take measures to restrict the population growth at a rational pace. Instead of leaving population planning to the provinces, the federal government must act quickly to implement a programme. Another major problem, which is also a cause of inflation, is the successive rises in the agriculture costs over the past few years.

The country also confronts water shortage problem because of increased climatic variability and extreme weather events, both of which have a detrimental influence on the water resources.

The agri industry is inextricably linked to food security and economic growth in other industries. The current administration has made sustainable expansion of the agriculture sector a top priority, and it is putting in place the best policies as possible to achieve that goal.

Agricultural output will rise even more because of the government’s growth packages, which will trickle down to the farmers. Use of higher-quality seed and new technology is required to improve agricultural prospects, which will be helpful in controlling food inflation. There is a need to strictly control and check the hoarding of food items produced in the country. Furthermore, agricultural R&D must be invested in, and food cartels must be eliminated.

The government is initiating supporting policies for the agriculture sector to prosper and overcome the escalating food inflation, but improvement in this sector is dependent on continuation of measures.

The writer is for Director News at Associated Press of Pakistan.