World Bank urges Pakistan to tackle soaring food prices

WEB DESK: The World Bank, in a policy note published on February 13, 2024, has highlighted the pressing issue of high food inflation and volatility in Pakistan, surpassing neighbouring countries.

A recent FAO report underscores that 68 per cent of Pakistan’s population cannot afford a healthy diet. On average, households allocate 36 per cent of consumption expenditure to food, with variations across income quintiles.

The World Bank emphasises that addressing food price inflation is crucial for the government to protect the poor and combat undernutrition. However, it warns against the unintended consequences of government interventions, which may distort the market’s efficiency.

Pakistan, being a net food importer, is susceptible to international price volatility and exchange rate fluctuations.

Underlying causes of the price hikes include inappropriate policies, market distortions, and limited efforts for research, innovation, and technology dissemination.

The World Bank suggests that policymakers need to understand the intricate interactions within the food system to manage inflation effectively.

To tackle these issues, the World Bank, along with other partners, is preparing Just-in-Time (JIT) Policy Notes to propose short- and medium-term improvements in agriculture and food security in Pakistan.

The objective is to make the agriculture sector dynamic, efficient, and climate-smart, contributing to rural growth.

The first note in the series examines Pakistan’s food system vulnerabilities and recommends steps to strengthen supply, address inefficiencies, and meet the population’s food needs.

It calls for removing information asymmetry, adopting an open data policy, maintaining stable policy positions, and eliminating distortive policies.

Encouraging private sector participation is crucial, with a focus on rewarding performance and efficiency. The World Bank suggests the operationalization and monitoring of acts like PAMRA in Punjab and similar acts in other provinces.

Additionally, it advocates making research and development (R&D) a national priority, emphasising collaboration and adequate funding.

Well-targeted social protection tools are recommended as a more efficient alternative to untargeted subsidies, protecting the poor from market vulnerabilities.

The study indicates that over half of household food expenditure is on cereals, meat, and dairy, with differences in dietary patterns between the poorest and richest quintiles.

In conclusion, the World Bank’s policy note provides a comprehensive analysis of Pakistan’s food system vulnerabilities and offers strategic recommendations to address food price inflation, promote efficiency, and ensure food security for the population.

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