The nation is on the eve of the greatest festival, Dashain, but we are witnessing uncontrolled hike of market prices that are beyond the capacity of ordinary people. At a time when Bhat-Bhateni Supermarket and other departmental stores are selling sugar at Rs. 110 per kg, the same product is priced at Rs. 160 in other shops. The price of goat meat has also risen to Rs. 1,700 per kg in the local market.
The government had established the Food Corporation with the objective of intervening in the market and ensuring the availability of essential consumer goods at reasonable prices. During the Panchayat era, the Food Corporation was established to intervene in the market. The Corporation was not established solely for profit; it was also responsible for providing essential goods at subsidised prices. It had branches, at least in district headquarters, to develop a distribution network across the country.
The Corporation, now operating under a new name, was until last year selling goats at subsidised prices, which had significantly contributed to controlling market prices. This year, however, the Corporation decided not to sell goats.
Our Finance Minister, Swarnim Wagle, who was educated in the United States and is seen as being familiar with the theory of demand and supply, was reported as saying that the government should not engage in business. Although many arms and security-related industries in the United States operate under government supervision, developing countries are often advised to leave business activities to the private sector. Such an approach may be appropriate in a developed economy, but the theory of demand and supply does not necessarily work in the same way in a country like Nepal, where markets remain relatively underdeveloped and fragmented.
A recent study by the Ministry of Agriculture reportedly found that there are four layers of intermediaries between farmers and consumers. Farmers, on the one hand, do not receive a fair price for their products, while consumers, on the other hand, are compelled to pay high prices for the same products. In the absence of effective market intervention and regulation, the intermediary or broker economy will continue to flourish, as we are experiencing in Nepal.
There is neither an effective government monitoring mechanism nor sufficient government intervention to curb the dominance of middlemen in the market. We can, therefore, argue that capitalism and the free-market mechanism may not be practical in every circumstance. In a country like Nepal, the government must find an appropriate balance between market forces and responsible state intervention to protect both producers and consumers.
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