Text of article in English by Muhsen Nazari entitled “Further food price hikes expected” published by independent Afghan newspaper Kabul Weekly on 10 September
The cost of food and fuel in Afghanistan shot up this year with some items even doubling in price from last year. Now importers are warning the government of a further 30 per cent rise by the end of the year.
Last December the government of Pakistan stopped the private sector from exporting wheat to Afghanistan after the increase in world food prices. Consequently, the price of flour, oil and rice doubled and prices of basic food items increased by 30 per cent to 50 per cent. According to the business sector, a further 30 per cent increase in prices would make it impossible for consumers to purchase goods and would create a crisis for the country.
The price of a 100kg bag of Pakistani wheat was 1,600 Afghanis last year, now the price is 3,500 Afghanis. Similarly the price of a five litre can of oil, which cost 250 Afghanis last year, now costs 550 Afghanis. The price of one litre of gas has doubled from last year. In the meantime, although the price of petrol and diesel has decreased in the international market in recent months, in Afghanistan it has remained the same. The price for one litre of petrol jumped from 28 Afghanis to 52 Afghanis during the last eighteen months. So the question is why is the private sector warning of another 30 per cent increase in prices by the end of the year?
While the Afghan government blames the private sector for the price increases, directly or indirectly, businesses say that the main reason for the increases is the lack of planning by government. “Since last year, our imports from Pakistan have been stopped. At the moment, we import food items, particularly wheat from Kazakhstan and the Ukraine. The harvest time for wheat in these countries is over and there are signs that these countries will decrease their exports next year”, said Engineer Mohammad Shafi Ahmadi, head of the Food Sellers Union.
Lack of strategic reserves and the deterioration of the security situation on highways are the main reasons for the price increases, said Ahmadi. The costs for transporting imported goods are now 40 per cent higher than last year. This does not include unofficial payments, which increase day by day. “Taking into account all these factors, we want the government to take appropriate action, otherwise a further 30 per cent increase will be unavoidable,” said Ahmadi.
In the past, all food items for government offices were supplied by the central silo and did not come from the markets. But at present, everyone is reliant on the markets. Even the Afghan National Army (ANA) buys its bread from the markets. This causes an increase in demand which in turn increases the prices.
Landlocked countries who import their basic needs, including food, from other countries are completely dependent on their neighbours, says deputy minister of commerce and industry, Ziaudin Zia. “Even the smallest political, transport and business issues can impact prices immediately. The warning from Afghan importers is more of a prediction, not a reality. We accept that the security situation has worsened, but the government has ordered the Defence and Interior Ministries to take appropriate action. Also, the surplus of food items in the city’s markets shows that price decreases are possible,” said Zia.
At the moment the majority of wheat supplies for Afghanistan are being smuggled from the other side of the Durand Line, (Miramshah, Khost border and Wazirestan). The recent unrest in the Northwest Frontier Province caused a fall in imports from Pakistan which negatively impacted prices.
But how can we control this situation? According to Khan Jan Alakozay, the deputy of ACCI, taking into account the free market policies of the government, prices cannot be controlled directly. “However, we can indirectly encourage businessmen to invest by importing food. This is an ongoing process. Some of our businessmen in Herat and Mazar-e Sharif have promised to sign contracts to import wheat from neighbouring countries. In the meantime, we have requested the government to build food reserves as soon as possible, so that in times of emergency ANA units will not empty the markets,” said Alokozay.
Originally published by Kabul Weekly in English 10 Sep 08.
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