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Stabilizing prices of essential commodities - MCQS Study Notes

Stabilizing prices of essential commodities

Stabilizing prices of essential commodities

By Brigadier (retd) Qamar-us-Salam Khan
THE promulgation of the Sindh Essential Commodities Price Control and Prevention of Profiteering and Hoarding Ordinance, 2006 is a significant improvement over the outdated Price Control and Prevention of Profiteering and Hoarding Act-1977.

Under this Act, 66 commodities are notified as essential commodities but the provincial government is empowered to fix prices of 18 items only.

Under this Act, the defunct deputy commissioners are notified as controller of prices in their respective districts.
However, no expert/qualified staff has been placed at their disposal to collect, collate and carry out price analysis for fixing prices, keeping in view the supply and demand situation.
After the devolution of power, the city governments have not been effective in controlling the prices. They, neither, have the expertise for price analysis and control nor they have the magisterial power to stabilise prices.
Even the agricultural ‘mandis’ which have a substantive influence over the prices of fruit and vegetable have been kept out of the control of district governments. The Price Control Ordinance 2006 envisages notification of district controller of prices having wide powers to order declaration of stock by traders.
Various punishments including fines and imprisonments have been specified for profiteers according to the nature and size of trade. But this Ordinance also does not provide facility of price analysis.
In case of fruits and vegetables, no organisation has been proposed to collect, collate and analyze prices based on market information system. This organisation should be inter-linked with major markets to keep an effective watch on inter-provincial production, storage and movement of essential commodities.
Without this timely information, setting prices on scientific analysis will not be possible. Although according to the Ordinance, producers, stockists and sellers of essential commodities are required to declare their stocks, but without effective ground check the information, so supplied, cannot be verified and will remain open to manipulation. Also creation of an IT-based price analysis cell at the provincial and district levels is necessary. This cell should have the capability and expertise of collection, collation and price analysis. Timely dissemination of this information to city governments will make price fixation more realistic.
There is also a need to amend and improve the Agricultural Produce Market Act to ensure equitable representation of grocers, traders and consumers in market committees. Presently, there are hardly any representative committees.
Mandis are controlled by agricultural extension departments and are dominated by traders. There is an utter lack of supervision and control over the enforcement of APM ACT and its laws.
The strong mafia of ‘arthis’ manipulate the prices at their will. In mandis, there is no effective arrangement of open auction, quality control and correct weighing system.
Many fruits and vegetables are booked in advance by traders who pay/offer loan to the poor farmers against their crop under the control of these traders. The ripe crop is plucked, graded, packed and brought to market and disposed off by their henchmen working as auctioneers through concealed bidding.
They are so powerful that functionaries of market committee cannot intervene. Thus poor farmers gets a very low price for their crop and traders gain the maximum profit through price stipulation.
The following steps are essential to regulate the control the prices:
* Weighing of items entering market is essential to provide timely and correct state of supply to price analysts for fixation of price according to the volume of demand.
* Grading facilities be provided to enable arbitration between seller and buyers on grade and quantity of the produce.
* Enforcement of open auction in mandis through strengthening of the market committee functionaries.
* Provision of cold storage, call centers, banks, post offices and police protection in mandis.
The Sindh Registration of Godowns/Ware Act 1995 has many problems of its enforcement particularly in Karachi which is a major trade centre. The present concentration of godowns of essential commodities are in old Karachi— Jodia Bazar. These are mostly located in the century old buildings in the thickly populated suburb. In some cases, even the ground floors of residential buildings are being used as godowns and warehouses.
Similar situation prevails in cities where there are no separate grain ‘mandis’ outside the populated area. As a result, enforcement of this Act in letter and spirit is not possible.
The unscrupulous traders easily hoard the commodities in their undeclared godowns, making it impossible for the functionaries to check and verify the declaration made by traders.
It is therefore essential that proper ‘anaj mandis’ and warehouses are established outside the thickly populated areas, so that effective check and verification of stock can be made to discourage hoarding and black marketing.
The Sindh Standard Weight & Measures (Enforcement Act, 1975) provides for enforcement of weights and measures used in trade transaction. It requires that weights and measures used in trade to be verified and stamped every 12 months and petrol pumps in six months. It involves testing of all electronic and mechanical weighing implements. For this purpose, scrutiny of every trader is required. This Act is also outmoded and needs complete review in view of introduction of electronic implements for measurements.
The induction of electronic weight and measures system requires inspectors having electronic degrees to ensure effective implementation of the Act.
The present staff is only trained and experienced in checking the traditional mechanical weights and measures implements used in trade. Therefore, there is a need to regulate and re-organize this department. It is also essential that workshop and laboratory for checking weights and measures must be updated at the provincial level according to the policy of the Pakistan Standards Institute.
Strict checking of weight and measures used in the trade will also help in price stabilization. This aspect needs to be kept in mind while enforcing the Sindh Essential Commodities Price Control Ordinance 2006.
Bachat Bazars: The proposal to increase the number of utility stores is neither practical nor it has proved to be an effective element in stabilising the prices. Performance of utility shops is marred by corruption and inefficiency. The financial support provided by the government has just been frittered away without making any dent in the prices. As such, as a measure of price stabilization, bachat bazars were introduced in the major towns.
The idea was to cut down the middlemen and provide an opportunity to the retailer to sell their goods at reasonable prices. It gives a fair chance to growers to bring their produce directly to consumers by eliminating middleman.
Through this means the overhead expenditure on establishment of a proper shop is reduced and the benefit is passed to consumers by reduction in the prices.
Unfortunately with the passage of time, these bazars are being auctioned to highest bidder on contract.
These contractors charge high rent from traders who eventually pass on the burden to consumers. These bazars have become a racket. Prices are neither fixed nor controlled by organizers. This system if properly organized and controlled by city nazims has a great potential for price stabilisation.
Such bazars will also provide opportunities to the small trades for self- employment.
In the past, price stabilisation measures were carried out by the Bureau of Supply and Prices, Government of Sindh, which was created in 1979. The reasons for its creation was to bring cohesion, coordination and responsibility of enforcement of such laws which directly or indirectly influenced the prices of essential commodities. For this purpose, the four acts pertaining to agricultural produce, price control, registration of godowns and weight and measures were brought under its jurisdiction.
It provided a pragmatic approach to ensure price stabilisation through a coordinated market mechanism, which ensured a free flow of supply and demand without undue hindrance of boarders and black marketers.
To this end in view, the Bureau succeeded in establishing a marketing information system which collected, analyzed and transmitted information to all concerned dealing with price control. Market committees were formed and well-organized agricultural markets were established throughout Sindh.
An effective mechanism was created to enforce price control. However, due to unknown reasons, this organisation was dissolved. It is presumed that this dissolution was engineered by powerful traders and industrialists.
Due to the complete dissipation of coordinated efforts towards price stabilisation, the prices of essential commodities are spinning out of control. The provincial government will be well advised to reconsider the reconstitution of Bureau of Supply and Prices.
The writer is ex-chairman Price Stabilisation Committee, government of Sindh

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