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Imports of pulses, palm oil, tea increase despite rupee devaluation.

Byline: Aamir Shafaat Khan

KARACHI -- Consumers are paying higher prices for essential food items despite a decline in rates of raw materials and finished goods in world markets during the past seven months of the current fiscal year.

Meanwhile, traders said the rupee devaluation has faded away the impact of falling world prices, thereby increasing the prices of ghee, cooking oil, tea, pulses, and spices.

Many companies and traders had enhanced their buying following drop in world prices of many commodities and raw materials. These stakeholders came out with a price hike on the basis of 15 per cent rupee fall against the dollar in the last seven months. Back in July 2018, when one dollar was equal to Rs121, the exchange rate changed drastically to Rs138/139 in January 2019.

Amid a decline of 8pc in the country's overall food import bill to $3.464 billion in 7MFY19, imports of pulses, tea and palm oil registered a positive growth in terms of quantities.

Essential food items costing more

Import of pulses rose to 563,035 tonnes costing $324 million in 7MFY19 from 408,975 tonnes worth $315m in same period last fiscal. Its average unit price (AUP) fell to $576 per tonne from $771 per tonne.

Wholesalers of pulses had pushed up price by Rs5-10 per kg on falling rupee value against the dollar.

Talking to Dawn, Patron-in-Chief Karachi Wholesalers Grocers Association (KWGA) Anis Majeed said, 'Regardless of the prevailing global prices of essential food items, the landing cost increases due to rupee devaluation which is done according to the ratio of increase in dollar value.'

'Given that the prices of pulses in world market are going down, the local market price should have fallen accordingly. However, the rupee devaluation has impacted the prices as payment is made in dollars,' he added.

Tea imports climbed to 132,784 tonnes ($347n) from 110,147 tonnes ($340m) in 7MFY18, while its AUP witnessed drastic fall to $2,616 per tonne from $3,086 per tonne.

Chairman Pakistan Tea Association (PTA), Shoaib Paracha said tea prices in the wholesale markets increased by Rs50-60 per kg from July 2018 onwards owing to rupee depreciation. He said Kenya tea prices had fallen due to good crop in the last two to three months.

The most notable decline of 74pc and 70pc in quantity and volume was witnessed in dry fruits and nuts - 16,997 tonnes and $27m - owing to massive smuggling of these items via informal channels. However, the AUP climbed to $1,596 from $1,396 per tonnes.

According to the figures of Pakistan Bureau of Statistics (PBS), another major fall came in soybean oil imports to 66,705 tonnes valuing $49m, down by 44pc and 53pc in quantity and value over same period 7MFY18. Soybean oil AUP plunged to $740 per tonne from $891 per tonne.

The AUP of palm oil also declined to $611 per tonne from $745 per tonne. However, its imports surged in quantity by 11pc to 1.8m tonnes but plunged in value by 9pc to $1.1bn. The local industry has expedited its imports to meet higher demand for ghee and cooking oil during Ramazan which will begin in the last week of May. Consumers had witnessed Rs10 per kg/litre jump in ghee and cooking oil prices.

Imports of milk cream and milk food for infants plunged to 48,162 tonnes ($137m) from 52,550 tonnes ($152m) in seven months of the last fiscal year. The AUP of milk products slightly fell to $2,859 per tonne from $2,898 per tonne.

Spices imports rose in quantity to 78,091 tonnes from 77,818 tonnes but its import bill remained low at $86m versus $93m. Its AUP came down to $1,105 per tonne from $1,195 per tonne.

Rice prices soared by Rs15-20 per kg in the last seven months amid a mixed trend in rice exports. Basmati exports surged to 328,374 tonnes ($305n) from 244,040 tonnes ($255m) while other varieties exports fell to 1.791m tonnes ($749m) from 2.034m tonnes ($812n) in 7MFY18.

Sugar prices swelled to Rs62-65 from Rs55 per kg while its exports plummeted to 276,393 tonnes ($82m) from 610,770 tonnes ($227m) in 7MFY18.

The price of various varieties of flour also rose by Rs2 per kg despite the availability of ample stocks from last year and the arrival of new crop in March/April. Wheat exports in 7MFY19 climbed to 468,443 tonnes ($99m) from 173 tonnes valuing $45,000.
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Publication:Dawn (Karachi, Pakistan)
Date:Mar 3, 2019
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