In case of Food prices, there is a strong case of targeted subsidies for the very poor. Tandoors of Punjab governments have not worked well, although it is politically very attractive to sell hot Roti at cheaper prices. Nor can the Utility Stores Corporation be effective without a formal rationing system.
There was rationing on flour (atta), sugar and rice up-till the late sixties, although mostly for demand management purposes. It worked petty well without the help of today's computers. There used to be a Ration Card and plenty of ration shops run by the private sector. The same can be done much more easily in these days of computerisation and other possible controls. Cheaper food items could be sold in poor neighbourhoods at subsidised prices.
Food prices would be lower, in a sustainable sense, only if agricultural productivity and efficiency goes up. Agricultural productivity in Pakistan is less than 50% of that in the comparable countries and the average agricultural productivity being similarly lower than the best within the country. This indicates great potential and scope for improvement. Similarly, a lot of water is wasted by the agricultural sector, resulting in lesser availability and lower water productivity.
Creative solutions are always possible. Look at the Sunday bazaars, which have played a good role. Middleman profiteering is notorious in the food sector. Even in advanced countries, there are co-operatives working at large-scales to eliminate the middleman. We hear only of scandals in the co-operative sector that we have seen in this country. Agricultural input prices can be controlled through buying co-operatives as well. Co-operatives avoiding wasteful competition and selling costs can and do result in lower costs and economic efficiency. Reduction of marketing risks enables attracting capital at cheaper rates than corresponding rates for a commercial operation. One may note the following examples:
--- In Brazil, co-operatives produce 72% of the wheat, 44% of barley, 43% of soya, 39% of milk and 35% of cotton and 21% of coffee resulting in exports of 1.3 billion dollars.
--- In Japan, agricultural co-operatives report output of $90 billion, with 91% Japanese farmers as members.
--- In Finland 74% of meat, 90% of dairy products, 50% of eggs, poultry and 34% of forests are controlled by co-operatives.
--- In Korea, agricultural co-operatives have a membership of over 2 million farms (90% all farmers), and an output of $11.00 billion and 70% of fishery products.
--- In Norway, 99% of Milk production and 76% of timber is coming out of the co-operatives.
--- In India the co-operative movement has had a considerable role and success in improving the Indian economy and social conditions. Two co-operatives have had countrywide out reach and are known world-wide. One covers milk and dairy and the other fertiliser. Gujarat Co-operative Milk Marketing Federation (GCMMF) markets its milk products with the trade name Amul, with a turnover of around 1.3 billion dollars. It has 2.7 million milk producer members in 13,141 village societies. In addition to marketing milk, it owns processing plants, markets a variety of milk products like cheese, butter, chocolate and ice cream. Even multinational firms are scared of its distribution network and competitiveness and quality.
--- Top 300 co-operatives called "Global 300", and an annual turnover of US $963 billion, almost equivalent to Canada's economy which is 9th in the world includes Switzerland's largest employer "Enpore" the largest dairy business, France's largest bank, the largest rice company, Japan's largest agri-co-operative Zen Noh with a turnover of $54 billion.
Federal and provincial governments can stabilise and reduce prices, increase employment, improve workers welfare, enhance economic output and exports by launching a major initiative in the co-operatives. In all such areas which are labour-intensive, co-operatives can be a useful agent; also to provide economies of scale bringing consumers together to create a large market; bringing producers together to support them with market, technology and information. Establishing co-operatives and putting them together is a lot easier than SMEs, where greed, secrecy and taxation issues do not let them go very far. However this should not be taken as a discouragement of SMEs, which has a role for itself for those with money, ambition and enterprise.
There is also a great need to reduce the cost of transportation and logistics. Improvements and energy efficiency in transportation fleets, improved farm to market roads and a better functioning railway system can all play a role.
Concluding, there are no easy or command options in reducing costs and prices. But it is certainly possible. Governments of the day, today or tomorrow, would need peace of mind to be able to think and launch and implement creative solutions. If they are embroiled in daily challenges and uncertainties not much would come out. Pressure for betterment, in fact, would have a counterproductive effect. While democracies work and thrive on controversy, contention and opposition, there is also a role and value for constructive engagement. To a certain extent, Pakistan's political process has acted positively in this respect. Politicians may be encouraged to continue the same path without abandon or feeling shy of the detractors. Reduction in government expenditure is dealt in the fourth part of this article.
(To be continued)
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