Beef Market Pricing and Public Policy Options

Due to government intervention, the beef market pricing in Pakistan does not follow supply and demand mechanism. The public managers fix prices and try to enforce them. However, the demand and supply factors don’t allow them to control the prices of beef fully. Furthermore, the sellers avoid price controls by degrading the quality of the meat in a market. It is happening though the significant supply of beef comes from inland farms and farmers.

On the other hand, the price controls are popular as the public policy option. The political leadership considers it a tool to allure voters for their public friendly policies. The consumers are unable to correlate damages caused by price controls. Similarly, such measures help them to avoid strict monitory policy to control inflation temporarily.

In fact, the beef market pricing can’t be taken into seclusion. It is part of the overall economic policy of the government, the taxes on imports, incentives for the sellers to smuggle out animals in Afghanistan and other border sharing countries. Thus the public policymakers need to consider other policy options as well to control or reduce prices of the essential commodities.

Improvement in Monetary Policy

The government needs to review its monitory policy to control inflation which impacts beef market prices directly or indirectly. Unfortunately, Pakistan’s monitory policy is not going well for last many years. It is failing to provide the due relief to the consumers as well the business. The State Bank of Pakistan has recently taken a right step in the right direction by reviewing monetary policy on every two months instead of twice a year. It can make it easier for the government to adjust its economic policies according to the changing environment.

Furthermore, the Government needs to realize that increasing volume of public loans and high-interest rate can’t help the rising prices of the beef and other essential commodities at any level. Besides this, the law and order situation in the country is also crowding out the private sector from loan market. The value of Pakistani rupee vis-à-vis US dollar is decreasing and impacting the prices of oils and other imports to increase prices of the products within the country.

Environment for Fair Competition

An environment for a fair competition can help the beef market prices to go down. The equilibrium prices of beef should be governed by demand and supply and consumer’s behavior instead of the government intervention in the market. When a government formulates laws to ensure such environment and availability of information to all consumers equally, the market forces bring the products and commodities into the reach of the consumers at reasonable prices. However, when price controls are enforced, the consumers, as well as the sellers, get some incentives to avoid such controls.

Private Companies' Methods

The researchers have been proving that private managers are not only more efficient but also make better choices than the public managers. They have discovered specific methods by which products can be sold to the consumers at lesser prices than in the open market. The public managers can study a few methods from the private managers to adopt them for the purpose.

The best private practice being utilized by the private managers is economies of scale where managers can purchase or produce products in bulk. It reduces costs and provides an opportunity to the buyers to negotiate a deal on less profit for the producer. Furthermore, the significant transactions provide an opportunity to the seller in bulk to reduce transaction costs. The economies of scale create cost savings of the supplier which can be distributed amongst the sellers and buyers.

Availability of goods substitutes also provides an opportunity to cut a better deal as he can go to the other seller if the first one does not come to good terms.

Government Price Controls

Why Price Controls Fail? (1)

Why Government Price Mechanism Fails? (2)

A Case for Price Controls

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