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Agric Ministry’s sale only a stopgap measure in addressing market failure – Dr. Mahama

Economic Advisor at the Office of the Vice President, Dr. Tiah Abdul-Kabiru Mahama, says the government’s foray into retailing foodstuff from the hinterlands at the Agric Ministry is only a stopgap measure to deal with the current food inflation.

According to him, government has no intention of continuing the project when the situation stabilizes especially with regards to cost of fuel and transportation which is driving the high cost of food produce in markets across urban centres.

“I don’t think that government wants to take the supply of food as part of the mandate of the Agricultural Ministry. Government is just doing this for the meantime whilst we work to ensure that we have some stability in the fuel market,” he said.

He explained that the need for this stopgap measure is to address a market failure.

He noted that while there have been suggestions such as capping the price of goods at the markets, government cannot employ such tactics due to the liberalized market system the country runs.

As such, creating the alternative market is in the hope that it will help bring some reprieve to consumers while also causing other market players to reduce their prices to match government’s competition.

“The assessment of government is that there is some discrepancies between the supply and then the demand and that they cost much. The transfer of cost from the seller to the buyer is that it’s not proportionate to the import cost as has been noted by my colleague Dr. Theo.

“Now how to address it, government will have to come in because the business of government if you’re operating a liberalized system or a liberalized market is sometimes to correct market inefficiencies, to correct the failure of the market.

“So the intervention by the Ministry is purely to correct a terminal problem because two years ago, three years ago, we were not having the Ministry of Agriculture having to force itself into the business of bringing foodstuff into the market centre for people to buy,” he said.

His comment comes after the Ministry of Agriculture on Friday began the direct sale of foodstuffs at its premises.

The move, according to the Ministry, is aimed at cushioning Ghanaians and mitigating the impact of rising food prices.

According to Dr. Mahama, the government does not intend to make the Agricultural Ministry a permanent market, as such other solutions are being interrogated to address the problem long term.

“So you see the core mandate of the Ministry is not to be trading stock, it’s not to be trading foodstuff that is well established. But they’re just coming into this particular stopgap measure to address a problem.

“We listened to your speakers say that this is a harvest season, hypothetically, in a harvest season prices of food stock supposed to be lower but this is the case where food inflation has gone to over 40% and specifically to the 43.4% as you alluded and from the data from the Ghana Statistical Service.

“So it means that there is a problem and of course one of the drivers is the fuel price and we all admit that it feeds into the billing of the farmers or the sellers but that gap has to be addressed.”

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