Food inflation likely to persist as cost of production remains high

KARACHI: Prices of a majority of edible commodities are likely to remain on the higher side in 2012 due to rising cost of production on account of increases in rates of power, petrol and gas, traders said on Saturday.

However, the price of sugar may remain stable next year due to a likely bumper crop. Moreover, the government has to maintain its buffer stock of the sweetener, said Javed Kiyani, Chairman of Pakistan Sugar Mills Association.

The price of the commodity declined drastically last year due to the production of sugar in surplus. “The industry produced 4.7 million tons of sugar against the annual consumption of 4.2 million tons. Besides, the market carried over a stock of 500,000 to 600,000 tons of sugar from the previous year, he said”.

He demanded of the government to purchase sugar from millers to keep its strategic reserves maintained, or allow them to export the commodity. Acceptance of any one of the two demands would help them finish this year’s stocks and return bank loan, he added.

Fareed Qurashi, General Secretary of Karachi Retail Grocers Group, said that the price of grocery items would remain on the higher side in the year ahead, as the government was all set to increase gas-tariff with effect from Sunday (today). The rate of power and petrol and other utilities are also likely to go further up in 2012, he added.

“Every increase in prices of fuel and utilities take rates of grocery and other essential commodities on the higher side,” he said, adding that for this reason the price of essential commodities had shot up in the preceding year 2011.

Abdul Maroof Siddiqui, Spokesman of Pakistan Poultry Association (Southern Zone), said that prices of chicken and eggs would continue to go up in 2012 due to massive increase in cost of production on account of rise in rates of diesel, electricity and wages.

“The insignificant farming for cows and goats in the country would partly play its role in surging the demand for chicken and eggs and their prices too,” he said, adding that chicken stands as the poor man’s meal in its segment, as the prices of beef and mutton are exorbitant compared to chicken meat.

A wholesaler of milk, who requested anonymity, speculated that the price of this essential commodity would surge above Rs80/litre in 2012 due to a continue rise in all varieties of fodder.

“Milk was to become costlier by Rs4 per litre from January 2012. But as bulk buying of milk remained nil by Pakola and Olpers from the open market since December 10, 2011, the milk sellers were compelled to put their decision of price-hike on hold till March 2012.”

Haji Shahjahan, President of Karachi Sabzi Mandi Vegtable Association, said that the price of onion may go up by about 20 percent in 2012 due to a rise in DAP and urea. “If floods again devastate the crops like it did in 2010 and 2011, then the price of the commodity may go up to Rs80-100/kg,” he said.

Aslam Pakhati, an exporter of onion, added that onion prices had been lower in December 2010- January 2011 due to a halt in onion exports to India by sea.

source: thenews