Re: The crises like never before
Right on!
Our supply chain system is at least 500 years old and it hasn't changed much in the last few years.
For food production to wholesale to retail outlets, we are utterly dependent on the vagaries of weather, small time hoarders, and yes the smugglers.
Some of it can squarely be blamed on the current and past governments, but majority of the blame goes to our heartless worm-y business elite who'd rather make pennies while costing themselves and the country $billions.
Why Blame the government?
For one specific reason we must blame the government! Monopoly!
Pak government encourages monopolistic behavior of our businessmen by acting as the biggest monopoly in the country.
Pak gov is fighting the hoarders aka monopolistic pigs with setting up its own monopoly called "utility stores".
Not only that, our gov sets the price per kilo of aata, thus ensuring lack of competition and thus hoarding.
Our corporate laws are so archaic that more efficient wholesalers have no reason to buy out the less efficient ones.
Our agri laws encourage fragmentation of land, and thus decreasing our food production per acre.
If we ever turn our farms into corporate run "agricultural factories", believe me, we will have much higher yield, and thus lower prices due to competition among suppliers.
The real culprit is our outdated 500 years old retail sector Our retail sector must go the way of dinosaurs. It is one of the most inefficient places to distribute food and other commodities among masses.
Lack of "large buying" capacity of our retail means that the wholesalers can jack up the price any time they want. A typical retailer in Pakistan buys at the most 20 bags per delivery truck from the wholesaler. Even for 20 bags, this retailer doesn't pay cash but instead hold the money for months on end.
This tiny order of 20 bags per shop, and no incentive for money, the wholesaler can set whatever price he wants.
Using monopoly, all the wholesalers decide to follow the herd, and suddenly the aata disappears from the market.
Suppose if walmart like chain in Pakistan with 2000 stores nationwide was buying atta from wholesalers. With millions of tonnes of atta worth bilions of rupees at stake, and hope of quick payment, wholesalers would never dare refusing the supply to this mega-retailer.
Why because this Mega-retailer can simply go straight to the flour mills and cut out the middle man entirely.
Off course some of you might say that walmart in itself will become monopoly and starts setting prices at its will.
The solution is to have at least three chain outlets in every region, and then use government's force to keep them from monopolizing.
Our fix price system must go away because it belongs to now defunct socialists and commies. Better quality aata must fetch more price than the lower quality one. Then let the people decide what kind of aata they want to buy.
But the government must get out of retail sector like "utility stores". They don't work.
The only role of the government may be to maintain some "strategic reserves". But other than that, the rest of the supply chain must be run on modern scales and techniques.
So my friends we must take some short term and some long term measures to improve our supply chain.
Otherwise we will continue to be chained with poor supply of food items, and in turn continue to blame one of the other government for the wrong reasons.
thanks. that was a very informative post and contains exactly the sort of information lacking in our media. i have very little knowledge of food production in pak but i know that govt's attempt to fix prices are doomed to failure. however given large number of poor people in pak, i am not sure if prices can be left to market completely. difficult problem. too bad people are interested in scoring political points instead of coming up with the optimum solution.