Poor Govt Policies Are Hurting Agriculture and Food Security in Pakistan: World Bank

The World Bank, working with other partners, is preparing a series of Just-in-Time (JIT) Policy Notes that aim to address pressing issues related to agriculture and food security in Pakistan and propose improvements in the short and medium term. The ‘Just-in-Time Policy Note on Agriculture and Food in Pakistan’ points out that food inflation and volatility in Pakistan are being caused by inappropriate policies and regulations that distort markets, inhibit competition and discourage private investment, as well as limited and poorly implemented efforts for research, innovation, and technology dissemination. Pakistan has experienced both high inflation and volatility of food prices over recent years highlighting the need to strengthen its food system. Food price inflation is driven by the interaction of demand and supply factors influenced by diverse actors in the system. These interactions often do not result in optimal outcomes due to challenges like uncompetitive market conditions (e.g faster pass-through of global surges in food prices to domestic prices than global falls) and market failures (e.g. higher food inflation in rural areas compared to urban areas, possibly due to higher margins in urban markets). Both affordability and availability constrain access to a healthy diet. According to a recent FAO report on food security, 68 percent of Pakistan’s population cannot afford a healthy diet. On the production side, insufficient productivity, market distortions, and limitations of trade result in market rigidities that push prices. With little productivity improvement and increasing population size, the per capita production of major commodities is barely keeping supply up to meet the country’s requirements. An analysis of price monitoring indices in Pakistan indicates that food price inflation has historically been supply-driven. Among other things, food prices are also volatile, triggered by different market and non-market factors and exacerbated by systematic weaknesses like market fragmentation and information asymmetry. Market factors include speculative behaviors like hoarding that can drive up prices, and non-market factors include events like a pandemic or climate change. The previous 6 recommendations are all important contributors to a broader set of actions that can be taken to strengthen the food system, as summarized below: