Historically human psychology and wheat have enjoyed a harmonious relationship. Wheat, a staple food, had been a cause of various revolution and battles. Pakistan too saw severe wheat crisis several times in her history. Luckily since the reforms and policy implemented in 1999, Pakistan has become self-sufficient to fulfil its wheat requirement.
The collected data over the last 15 years indicates an average of 25 million tons of wheat production annually. Occasionally imports were required to attain adequate supply but it was generally linked to crop loss due to flooding.
This year too, wheat production was predicted to exceed the need, but due to unfortunate circumstances like torrential rain, delayed and insufficient procurement by the provincial government led to the present crisis of wheat shortage which naturally resulted in inflation.
The government was informed about this shortage as early as June and was advised to ensure procurement through imports. The delays in this process are being blamed for this uncontrolled inflation.
To ensure a prosperous production year in 2021, the Economic Coordination Committee (ECC) is pondering over an increase in Minimum Support Price (MSP) by 15%. If this goes through than the production will not only be sufficient to meet the required wheat needs but could also be exported at a fine price.
Another obstacle for steady wheat supply is the transportation issue. Karachi is the centre of trade is mired with transportation issues. Rapid and uninterrupted transportation of goods and import is hindered due to lack of transportation option to upcountry. Lack of option for bulk cargo transportation is leading to mafia mentality in the transportation sector – which could be solved through Cargo train as was proposed by former Federal Minister for Railways Sheikh Rasheed Ahmed.
KCR and BRT proposed in Karachi transportation plan may ease some of the problems faced in to and fro port movement. But it should be done sooner rather than later. The time lost in implementation will ultimately cause economic loss.
The available data indicates that the recent crisis could have been avoided, had the planning and implementation of the proposed action plan wasn’t hindered due to the division of decision-making bodies and overlapping authorities.
Available data indicates a pattern in import vs export ratio with respect to MSP rates. Interestingly wheat export is banned in Pakistan but for short stretches of time government may lift the ban or do government to government deals, but export to Afghanistan through various channels is still thriving. The data for 2020 seems too skewed; misreporting, illegal trade, backdoor deals and absence of transparent communication between provincial and federal governing bodies.
In much-anticipated crises, without rational dealing with the issues at hands, the crises seem unlikely to be resolved save of how much wheat is put under import.
Submitted by Syed Zain US Salikeen Qadri, Date 24 January 2021.