The Competition Commission of Pakistan (CCP) has been directed by Finance Minister Ishaq Dar to investigate the causes behind increasing prices of essential daily food commodities and check whether anti-competitive practices like collusion or abuse of dominance is behind price hike of commodities like milk powder.
According to details, a meeting of the National Price Monitoring Committee was held on 24th August, in which the Minister showed concern at the increasing trend in prices of milk powder and advised CCP to look into the matter to eliminate undue profit margin and also advised CCP to examine the increasing meat and mutton price trend and bring up the findings in the next meeting so that corrective measures can be taken.
An expert opined that a revenue generation measure was taken in budget (2016-17) to withdraw sales tax zero-rating on dairy sector. The dairy sector had informed National Assembly/Senate Standing Committees on Finance that the budgetary measure on dairy sector will push prices upward by Rs 6-8 per litre at least, making dairy products and all micro-nutrient fortified products unaffordable to the general public. As it was a budgetary measure, the same was not withdrawn through amended Finance Bill 2016.
Sources said that the Competition Act, 2010 prohibits collusion or cartelization among companies to fix prices or abuse the dominant position of companies to unreasonably raise prices.
Chairperson of CCP Vadiyya Khalil was present in the meeting along with her team. She informed the Minister that CCP was conducting a study on the meat sector, which will soon be released for public comments.
Similar directions were given to CCP in the NPMC meeting last year. After consultation with the stakeholders, CCP had submitted a detailed report in the NPMC meeting offering solid recommendations regarding the essential food commodities. The proposals then put forward by CCP were: devising and implementing a uniform pricing formula by all provinces at wholesale level; mapping of commodities'' supply in the country; establishment of agricultural supermarkets for farmers on public private partnership model; establishing a monitoring commission to decide on timely import and export permissions related to food commodities; fixing supporting price of declining crops, and maintaining a security buffer stock to counter supply shortages.
The CCP recommended encouragement of food processing and allied industries through the establishment of cool chains for perishable commodities. This would reduce wastage of perishable commodities and also generate economic activity. It would also reduce the import of processed food. The food processing industry can be encouraged through the provision of tax incentives. The government can incentivize such projects through the Infrastructure Project Development Facility (IPDF).
The CCP has recommended that a central body established at the Federal level may monitor the supply situation and recommend export controls in case of shortages or opening up of exports in case of excess supply. The federal government can greatly assist in ensuring adequate supply by continuing to take timely decisions to bar export of commodities when a shortfall is expected. If commodities cannot be taken out of the country in times of crisis, shortages can be avoided and traders will be encouraged to ensure supply in the domestic market. This will have a positive impact on prices. A centralised monitoring authority would enable the timely identification of import needs in case of insufficient domestic supply.
Emergency procurement has led to losses to the exchequer which could be avoided if there is a centralised authority monitoring the supply and demand situation that can accurately forecast import needs.
The Finance Minister Ishaq Dar appreciated the proposals of CCP and asked the relevant ministries and departments to co-ordinate with CCP regarding implementation of the proposals.