Anis Majeed is the Chairman of Karachi Wholesales Grocers Association (KWGA). He had worked as General Secretary for five terms (10 years) before serving as the Chairman of the Association. The members of the Association, more than 600 in numbers, are wholesalers, importers and exporters of pulses, rice, sugar and wheat. He had been elected as Member Managing Committee of Karachi Chamber of Commerce and Industry (KCCI) in 2010-11 and was also given the responsibility to serve as the Chairman, Import and Anti-smuggling Committee of KCCI. BR Research: Please tell us about the KWGA! In what ways and areas does the association work toward interests of grocers in the city? What are the contours of membership with the Association? Anis Majeed: You need to be an NTN holder implying that the member is a registered income tax payer doing business in commodities, including wheat, pulses, sugar, etc, as well as importers and exporters of food items. The association acts as a bridge between the government and the members. We represent members in talks with the government. One of the priority areas of the Association and a major issue for most of our members, is that of price control that has to be negotiated with the Controller General of Prices. Aside from that there is also a Market Committee, which deals with day-to-day problems and issues in the market. There are also separate committees for rice, pulses and wheat, for example. An arbitration committee also exists, which helps resolve issues and disputes between members. This way there is a sense of coherence between members. We also coordinate with the citizens liaison police committee, which provides the members a sense of security. BRR: Is the Association more exposed to the Federal Government or to the Provincial Government? What kinds of issues are dealt with and at what level? AM: The only thing related to the Federal Government is the issue of income tax. The rest of our matters are related to and co-ordinated with the provincial government. For example, matters related to police, price control and market committee are all co-ordinated with the provincial government. BRR: With provincial tax authorities also in place now, has there been any instance of duplication in taxes? AM: No, taxes are co-ordinated with the Federal Government alone. However, there are many different types of taxes that create difficulties for our members, such as professional tax, market committee fees, sign board fees, fees for weights and measurements. BRR: So do you face difficulties in filing of taxes because of these? AM: There are multiple departments corresponding to the various types of taxes. Unfortunately, much of the revenue collected from these taxes does not truly reach the governments kitty. BRR: Inflation data by the Pakistan Bureau of Statistics (PBS) related to grocery commodities is usually very low compared to actual prices in the market. Why is that so; is it really possible that there are, maybe, suppliers in the market who sell groceries listed in the CPI basket at lower levels or can we say that PBS data is cooked up? AM: The data you are mentioning is picked-up data from the market, but also from other sources such as market reports and newspapers. However, there is indeed a difference in the prices at the market and those reported in government records. This is a major issue that needs to be dealt with. Market has its own ways that determine pricing. Problems are more acute where government departments are involved. However, governments involvement is also necessary. Unfortunately, in Pakistan, it leads to more problems in the market. The government fixes prices for wholesalers on a monthly basis (earlier it used to be on a fortnightly basis). My position is that-if you provide us with supplies then fixing prices is fine. But, fixing prices and then leaving us sellers to the market is fundamentally incorrect. The government stresses that price fixing applies on essential items, and we understand that. But, then for that too, they need to ensure adequate supply before fixing prices for us, or at least ensure an arrangement that we have supplies enough that can comply with the fixed prices for a set time. On the other hand, a host of things impact us as far as commodity prices are concerned. So, for example, we get hurt with deterioration in currency when we have to import. Second, when commodities and crops get affected due to weather, they are sold to us accordingly (reflecting the decrease or increase in prices), while prices are set for us to comply with. There is a price control act which states that producers and manufacturers come first. However, when it comes to fixing prices, the government ignores them and instead imposes fixed prices on wholesalers. The government is so overstretched that there is little that can really be done to address such issues. BRR: So, the government is involved at the stage of fixing prices but is absent when it comes to regulating the market? AM: Yes. When prices increase in the market, we still have to stick with the prices fixed by the government. BRR: So, the official data on food price inflation should be following the price lists issued by the government, even though prices could be behaving differently in the market. AM: Yes, that is my understanding. Prices are determined according to market forces and the government knows that too. The government, however, is too overstretched to understand and address these issues. Further, they are also misguided by others, who do not realise that there is always an impact of the macroeconomic situation on the market and prices at the micro level. BRR: In the instance that the government is unable to coordinate prices then does the Association do so for its members to follow? AM: No, we do not. Prices are fixed by the government. But, we do notify the government that a certain commoditys prices have changed and, therefore, need to be readjusted in the price lists issued. For example, sugar prices in the market have risen by Rs 3 since the price list was issued at the beginning of this month. But, we have to sell on the price issued by the government. We have written to the government that sugar prices originate at the millers while the prices are left fixed for wholesalers to comply with. However, may be the government finds it difficult to regulate the millers. Similarly, other prices are determined at the producers end. When a commodity is produced, it is stored by stockists, who understandably earn profits for maintaining supplies. BRR: Isnt that artificial if prices go up as stocks mount? AM: No, not when the produce is already there in the market. But, if the price is projected to be higher a day or two later, everyone would release his stocks for sale accordingly. Again, it should be noted that prices are determined according to market forces. For example, daal chana is currently trading at Rs 45. However, it was earlier bought by traders at a price of Rs 50. So there are instances when they have to bear losses, just as they earn profits when market prices go higher. The government should step in to make up for the discrepancy in consumption and production and ensure adequate supplies. The government instead intervenes when prices hike due to market forces and enforce their prices. There is neither proper data nor a contingency mechanism to address such issues. BRR: Do you maintain data on your own; it may give credibility to issues raised by the Association, wouldnt it? AM: Who would listen; no one has an idea about how to address these issues and they are not interested either. BRR: How much business has been affected by the current protests and sit-in in Islamabad and how? How are these estimates made without data? What is the computational rationale behind the figures suggested for losses during such times? AM: These are all very rough claims based on crude estimates, for example, by taking a monthly or daily average from business figures of yesteryears. As far as the impact of the protests on markets is concerned, yes, there has been some. When the protests were going on in Lahore, all the produce at the port was stopped as the entire province of Punjab was blocked. Blockage of routes was having a bearing on transport of commodities to and from the port here in Karachi. But things are back to normal now. BRR: How have purchasing patterns changed in Karachi over the years in terms of quantity? AM: That is obviously related to the increase in population. On the other hand, production may not have increased at the same rate as population has. This leads to higher imports, which, in turn, exerts pressure on the currency. Further, the economy has been deteriorating in other areas as well. Why should then inflation not occur! BRR: But, there is also an element of internal migration from within Pakistan! Does that also put a pressure on demand and, therefore, also on prices? AM: Yes, but still Karachi is the cheapest city in the country. The shortages are then imported. Since production does not match the increase in demand, prices will hike if we do not import. BRR: There is also a view that Pakistan is self-dependent in commodities, such as wheat, and there is no need for imports that put a pressure on our BoP. AM: Yes, I agree with that to a certain extent. But these things lie within the purview of the government, which is unable to manage them. There are countless problems for example in the food department and quota systems which may have implications in terms of self-sufficiency. BRR: How are prices co-ordinated to incorporate for seasonal effects; such as during or prior to the month of Ramazan? AM: The impact of the month of Ramazan is also a myth. Public as well as the government often misunderstand this. The simple fact is that items used during the month of Ramazan are often those that are not used during other times of the year. There is higher demand in the market, leading to higher prices, simple. This Ramazan, for example, there was higher supply of daal chana, which brought down the price of the commodity, even though it is a highly consumable one. Simple market dynamics were at play, but no one notices when prices come down. The only way to curtail prices is by ensuring enough supplies. Prices are based on market forces, simple as that. During the month of Ramazan, demand is high that is reflected in prices. The government fails to understand this, even though there are good people in the government as well. But government departments are mired in inefficiencies and corruption. BRR: Have big retailers, such as Metro and Makro, had a significant impact on grocers? AM: No, because even they buy from the wholesale market and sell at much higher rates. If they import directly or engage in production themselves, then certainly there would be an impact on wholesalers. Large stores have started doing so in India, for example. BRR: There are reports that Afghan transit trade goods find ways into Pakistani market and are sold at discounted prices. Has that had a bearing on the business of your members? AM: No, not a significant impact yet. Our items are not related to them anyway. But fake stuff is not alright and that is not good business anyway. BRR: What is the association doing about fake and imitated products in the market? AM: This happens with packed items. Our wholesale is on unpacked bulk items so were not related to that in anyway. Anyone who is involved in the business of fake products is not a true businessperson. BRR: The Association also has a land-committee to address shortages of space in the market? To what extent have these issues been resolved? What are the problems in terms of land and space that grocers and shop-owners face? AM: No progress, no proper department to handle it. The main issue is that of congestion so the government will have to relocate these shops. But, so far there seems to be no solution in sight. brecorder/brief-recordings/0/1217337/
Posted on: Mon, 25 Aug 2014 12:13:38 +0000