Pakistan likely to face food shortage and spike in prices

In the aftermath of COVID-19 lockdowns, port congestions and supply chain disruptions food prices around the world are on the rise. Whatever is happening around the world is having trickle down effect on Pakistan. The situation is not different in three of its immediate neighboring countries, India, Afghanistan and Iran.

The biggest fear is that food products are being smuggled to these countries in large quantities and sooner than later Pakistan will also face acute shortage of these products. Therefore, it is necessary that the governments of these countries sit together to evolve a sustainable strategy to overcome the looming shortage of staple food items.

According to the available information three of Pakistan’s immediate neighbors suffer from acute problems, due to internal and external reasons. Let me begin with Afghanistan, the war torn country faces the worst problem, United Stated has frozen its foreign exchange reserve and the country is not able to import staple food items. It is feared that due to highly porous borders and use of Pakistani currency for the procurement of these items from Pakistan, Afghans has no option but to take these from products Pakistan to save people from starvation.

Iran also suffers due to ‘economic sanctions’. There are enormous opportunities for barter trade the goods are exchanging hands at borders. Since United States is not ready to lift these sanctions Iran is forced to buy food and other items from its immediate neighbors, be it Pakistan and Afghanistan or Central Asian countries.

India has ample food supplies, but bad governance, particularly ‘hording’ is pushing prices higher. Without going in too many details Indian are in a position to offer certain most sought after goods to Pakistan in exchange for food items. Since both the countries, due to the presence of ‘hawks’ don’t enjoy cordial diplomatic and economic relations the field is open for smugglers.

In the abnormal conditions people and countries have to make ‘exceptional’ decisions. Under the prevailing conditions the representatives of all the three countries must sit together to find sustainable solutions.

In case of Afghanistan trade must be allowed in Pak Rupee, export of wheat, edible oil and rice may be allowed in exchange for fruits and vegetables.

In case of Iran, ‘gas for food’ option should be exercised. At present prices of natural gas are hovering at record high level and Iran is in a position to supply gas to Pakistan at very attractive prices. Due to geographical proximity lower freight cost and shorter sailing time are the two biggest incentives.

Let me warn the policy makers that if they fail in coming up with conducive policy, it will only proliferate smuggling. On one hand the governments of respective countries will not be able to monitor the quantum of goods being smuggled and on the other hand floodgate will be opened for the influx of ‘highly undesirable products’ into Pakistan. Act now to avoid regret later.