Finally there is some official movement on checking the genesis of erratic urea price movements. And even though the same steps would have had much more value if relevant circles had pre-empted the commodity’s inflation, directly linked as it is to food affordability, certain factors need taking care of.
It is true that fertiliser companies had warned against price increases when the announcement concerning imminent gas shortage was made. Yet the government waited till the companies unilaterally jacked up urea price, meaning whatever action they will take will materialise after cost push inflation feeds into the food market. Also, while joint market positions that pressure agri prices to the upside must register on the regulator’s radar, it must ensure that the government’s promise of providing the sector with uninterrupted gas supply is taken into account when deliberating over the case.
There are definitely lapses on the official side, cramping the companies’ ability to meet pre-scheduled financial transactions. As things stand, regulatory authorities should investigate whether gas supply bottlenecks mandate coordinated price increases to the tune undertaken. The issue of cartelisation is also important because fertiliser companies occupy a position of considerable prominence on the bourse, and price-manipulation on their part can alter market movements, opening a new chapter in the investigation.
It is also important to ensure both speed and transparency in this exercise, since it will set an important national precedent. Of late, the government has been slow to react to price distortions that ultimately pressure middle and low income groups with stagnant wages. At the risk of repetition, this is probably the worst time to ignore valid concerns of the people. In too many parts of the world, they are reacting violently to what they consider unfair and unlawful seizure of their rights. Food cannot be allowed to become expensive because the government cannot settle a gas supply deal with a particular sector. Or because a few heavyweights can gang up to influence the market. Again, transparency must be assured.