Competition Commission, Cartelization in dairy sector and Dairy Association
Competition Commission, Cartelization in dairy sector and Dairy Association | کمپٹیشن کمیشن، کارٹیلائزیشن اور ڈیری ایسوسی ایشن ۔۔ مضامینِ نو،
مبینہ پولٹری کارٹل اور جمشید اقبال چیمہ ۔۔ مضامینِ نو، ڈاکٹر محمد جاسر آفتاب
By Dr. Muhammad Jasir Aftab
Government Fixes Milk Prices
When the administration itself fixes the price of milk, then where did the question of competition arise and then where did the issue of action on price fixation come from!
The demand of dairy farmers across Pakistan has been that the price be decapped so that an atmosphere of competition is established in the market and whoever has the quality of milk should receive the price accordingly. The issue of milk price in Karachi also comes up in this context.
Cartelization in Dairy Sector
The main reason for the cartelization being accused by the Competition Commission of Pakistan on the Dairy Farmers Associations is the announcement of milk rates by the associations. But it should be clear here that the associations announce this rate in protest against the rate announced by the government because they object to the rate fixed by the government.
Milk Price Should Reflect the Cost of Production
The milk rate has not been revised by the Karachi administration since 2018. If the inflation rate is taken into account, how is it possible that milk is being sold at the rate fixed four years ago? Of course, the demand for an increase in the price of milk due to an increase in the cost of production during this period is justified. Therefore, the price of milk should be announced at the official level in consultation with all stakeholders, keeping in mind the cost of production.
Solutions to Milk Price Issue
On the other hand, the option is that if the government wants to provide cheap milk to the public, it should subsidize it. In this regard, it is not appropriate to burden dairy farmers in any way. The third option is that the government should decap the price of milk and let milk be sold under market forces based on demand and supply. This will restore competition in terms of quality, quantity and price.
Competition Commission and Price Capping
In the current situation, when there is no competition in the market, then the action of the relevant institution on the basis of competition is also not appropriate. Yes, if milk is not being sold at the price fixed by the government, the administration should take action on it according to the laws and the farmers should present their position in this regard.
The press release issued by the Competition Commission states that the increase in the price of milk by farmers is causing a loss of Rs 130 million on a daily basis and Rs 47 billion annually to consumers. If the inquiry committee of the commission takes into account aspects like price capping and inflation, then who is responsible for the total loss of billions of rupees that farmers have been suffering on a daily basis for the past several years?
Of course, the increase in the inflation rate also increases the prices of milk production components, which increases the cost of milk production. On the other hand, when the price is fixed by the government, the farmer has to provide milk at a rate lower than the cost of production, due to which he suffers losses. If the rights of the consumer are considered, then the rights of the farmers are also there; if the concern is about consumer welfare, then farmer welfare is also something.
Milk Prices in Karachi and Other Cities
The press release also states that the price of milk in Karachi has increased compared to other cities. If a little study is done in this regard, it will be clear that the cost of milk production in Karachi is higher than in the big cities of Punjab.
Traditional Structure of Dairy Farming
It should also be kept in mind that at the level we are talking about, there is neither any corporate group in dairy farming nor do they do business in a corporate style. Similarly, these associations are not organized like the associations of corporate groups. Many associations will be found in the same city and many factions will also be found in the same association.
These farmers will not even know what cartelization is. They are doing business in their traditional way in their traditional ways. In a city like Karachi, dairy farming is also being done in the traditional way, in which the market has been involved on a daily basis along with “Bandhi” for decades. Bandhi is a mutual agreement between the farmer and the retailer where milk is supplied all year round at a certain rate. This work is usually done traditionally in other businesses as well. On the other hand, the market rate is determined on a daily basis under demand and supply.
Competition Commission in the Dairy Sector
As for the issue of how to reduce the price of milk, it is submitted that if there is inflation, it will also affect milk. If milk is forced to be sold at a rate lower than the cost of production, the farmer will cry out. The Competition Commission has the responsibility to maintain an atmosphere of competition in the market. For this, it is necessary to stop the price fixation of milk at any level and let the price of milk run on the principle of demand and supply under market forces. After that, if there is any systematic impact on the price anywhere, then action must be taken against it.
