It is midnight in the middle of October. Large container trucks are speeding past smaller vehicles, negotiating a crumbling, potholed road with sudden bends. They are all in a hurry. Everyone wants to be at the auction before it begins.
This flurry of nightly activity takes place with clockwork regularity seven days a week, on the outskirts of Karachi on a road that veers off the Karachi-Hyderabad motorway – about 10 kilometres northeast of the Sohrab Goth neighbourhood – and leads to New Sabzi Mandi, the city’s wholesale vegetable and fruit market. The mandi’s site, announced by a big signboard with blue lettering, is sprawled over hundreds of acres of government land leased to traders and commission agents (known as arrhtis in local parlance). They operate around 2,000 shops and offices here, as well as about half a dozen cold storage warehouses.
The mandi has two entrances. One grants access to the area where vegetables, and related products such as pesticides, are on display for sale; the other leads to the section where fruit is sold.
Between the two entrances lies a checkpoint manned by officials from the police and the paramilitary Rangers force. Everyone entering the mandi must show their national identity cards to the officials, and prove that they are either buyers, sellers or transporters. In some instances, containers and vehicles are physically checked to ensure that they do not carry any contraband such as weapons or explosives.
The checkpoint was set up after a long struggle by local traders who wanted the government to do something about rampant robberies and other law and order problems near the mandi. By 2008, news reports were calling the area a ‘mini-Bajaur’ or ‘Waziristan’, likening it to the almost ungovernable tribal areas on the Pak-Afghan border.
About 10 years ago, the mandi shifted to its current location from a congested site near Central Jail on University Road, but it still lacks any emergency services to tackle accidents and other disasters. This is in spite of the fact that in 2013 a fire gutted hundreds of its offices and shops. If the provincial government had put in place sufficient fire extinguishing and rescue arrangements, it might not have needed to pay a huge amount of money in compensation to the traders affected by the fire.
Auctioneers take over as soon as consignments are unloaded from trucks at the mandi. The vegetable auction begins at 12:30 am, starting with the most delicate produce, and continues till 5:30 am when the fruit auction starts.
The exercise follows a strict schedule: only one type of vegetable or fruit is auctioned within a particular slot of time. Auctions for different types of goods going on simultaneously, say market insiders, would create chaos. It would be impossible for buyers to be present at all the auctions at once.
The way auctions take place is rather old-fashioned. An auctioneer, who is usually the employee of an arrhti or middleman, stands next to a consignment with a megaphone in his hand. “Aik hazaar, aik hazaar das, aik hazaar bees,” shouts out one of them on this October morning as he auctions a 40-kilogramme bag of cucumbers. Buyers can glimpse the produce through a slit in the bag, which is eventually sold for 1,050 rupees. The buyer’s name is scribbled on it with a red marker before the auctioneer moves to the next lot.
Buyers who purchase vegetables in bulk from auctions are known as mashakhors in the mandi’s jargon. They then sell their purchase in smaller quantities to retail outlets, shopkeepers and pushcart vendors. At auctions, they conduct themselves in a discreet manner — poker-faced, giving away no signal of their eagerness to buy something, lest the sellers raise the price.
In order to keep prices artificially high, commission agents often deploy dummy mashakhors who are their own sub-agents. These mashakhors take part in the auction not in order to buy a consignment but to jack up the bids until the price reaches a level that is desirable for the commission agent, says Zulfiqar Ali, a government inspector working at the mandi.
The other major mechanism for bypassing the auction system is the direct delivery of goods by a commission agent to high-end buyers such as super stores, restaurants and hotels. Mehmood Khwaja, who appears to be around 60 years of age, procures vegetables and fruits from farmers and sells it directly to retailers. This distorts the market in two ways: first, farmers do not get the best price since they are selling their produce to a single buyer; second, the supply at the mandi decreases, driving prices up.
Tomato prices started soaring towards the end of September this year. By the 27th, they were selling at 250 rupees per kilogramme — more than three times higher than their normal market price. Rainfall during this monsoon season in Sindh both delayed and depressed the province’s tomato crop that was to be harvested in the latter part of September and early part of October, says an agriculture department official. The supplies that were coming in from Balochistan until then also decreased due to seasonal reasons, he adds. The market had far fewer tomatoes than buyers demanded.
The quickest way for the government to replenish supplies and bring down prices would have been to allow imports from neighbouring countries, but that could not happen due to a number of political and commercial impediments. Our hostile relations with India, for instance, make any imports from there a controversial issue. This gets further complicated by the strong resistance offered by farmers in Punjab to any vegetable imports from across our eastern border. In the west, our border with Afghanistan is often closed due to various problems including those related to bilateral trade. This has been even more so the case over the last six months or so.
And then there was another factor.
Sindh Chief Minister Syed Murad Ali Shah told a meeting of the agriculture department a few weeks ago that commission agents were meddling with the supply of fresh tomatoes from Sajawal and Thatta districts. They were buying the vegetable directly from farmers and selling it to retailers, bypassing the mandi and its auction system altogether, he said.
A senior official of the Sindh agriculture department acknowledges that commission agents wield enormous power in determining vegetable prices. They have advanced and detailed knowledge of the demand and supply chain which helps them determine when to procure a commodity and at what price, thus allowing them to purchase it at a low price and sell it at a high one. They negotiate prices directly with farmers who generally have next to no information about market dynamics, and often end up selling their produce at much below the market rate.
One way to limit the power of commission agents is to set up more mandis. The government in Sindh has made plans to set up two more mandis in Karachi — one to be located at Ghagar Phatak for the produce coming in from the eastern districts of Thatta and Sajawal, and another along the Northern Bypass for vegetables coming in from Balochistan. Work on them started as far back as 2008, and they are expected to be in place by 2020. These new mandis may break the market stranglehold of the commission agents operating from New Sabzi Mandi, says Zulfiqar Ali, the government inspector working there.
Until then, buyers beware.
The article was originally published in the Herald's November 2017 issue. To read more subscribe to the Herald in print.