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Problematic surplus wheat
By Afshan Subohi
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three-member committee of senior officials has been assigned
the task of drawing up a strategy to utilise surplus wheat
in the light of proposals received from different
stakeholders.
Set up by the Economic Coordination Committee of the
Cabinet, the body comprises federal secretaries for food,
commerce and finance.
Pakistan produced more wheat than it consumes this year. The
carryover stocks from the last year added up to about five
million tons of surplus. The government, the Federal Wheat
Commissioner, Dr Shakeel told Dawn, procured offered wheat
at the promised price, resulting in government having more
wheat than its storage capacity.
“The government has yet to decide if it wanted to bring
prices down to perk up demand of value added sector of
wheat-based products ahead of Ramadan or find a suitable
price and destination for wheat export to deal with
abundance”, Dr Shakeel, the Wheat Commissioner told Dawn
over telephone from Islamabad.
“Yes, the proposal to supply atta bags worth Rs1000 under
Benazir Income Support Programme instead of cash to
deserving Pakistanis is also on the table along with other
options. It is up to the secretaries committee to put the
strategy before the cabinet which would take a final
decision in this regard”, Dr Shakeel explained, agreeing
that the problem is both complex and critical.
Nazar Mohammad Gondal, the federal minister for food told
Dawn from Islamabad that the government has decided in
principle to allow export of wheat.
“The decision regarding the timing and modus operandi for
export will soon be made public”, he said.
The elected government has been able to improve wheat output
by offering farmers an attractive support price. On the
strength of comfortable supply position, it has also
succeeded in stabilising price of the staple food.
Atta (wheat flour), the byproduct used in making nan/roti
(bread), is selling for Rs25 to 35 per Kg, depending on the
quality and sale point. According to a rough estimate an
average family consumes almost two kilogrammes of wheat
flour a day and spends Rs1500-2000 on it in a month. The
minimum wage has been pushed up to Rs7000 per month in May
2010 from Rs6000 earlier.
The government, however, failed to manage the higher wheat
output this year by making the wheat economy more efficient
and competitive. Informal interviews of stakeholders by Dawn
confirmed that the PPP government did not act effectively to
utilise the current period of comfort when the crop size
touched about 24 million tons, to break out of the boom/bust
production cycles for a roti (local bread)-eating nation.
The government was unable to generate additional domestic
demand for the wheat based value added products or manage
import orders to dispose off excess wheat stocks. Instead it
procured more wheat than it could handle, dumping the
procured crop at open spaces, risking damage and wastage of
the valuable grain.
“Despite many viable solutions put forward by progressive
growers’ bodies and others, the stranglehold of the vested
interest was too strong to let new ideas to be
experimented”, Mehmud Nawaz Shah of Sindh Abadgar Board,
commented over telephone.
There were complaints of widespread corruption in the
provincial food departments and Passco. There was no
effective monitoring or audit of procured stocks stored at
different locations all over the country. It was implied
that there is continued pilferage of wheat from these
places.
The high-placed officials outright dispelled such
allegations. “It is very irresponsible to implicate
individuals without solid evidence”, an officer in Islamabad
responded. The PPP government raised the support price of
wheat to Rs950 to encourage farmers to grow more wheat at
the risk of a backlash from WTO that discourages direct
government intervention in the market.
The policy paid off and the country reaped a bumper crop of
23.86 million tons despite low per acre yield. The WTO,
however, served on Pakistan a notice on complaint of wheat
producing nations.
“Wheat exporting countries have sent a consultation
reference under WTO provision of (Agreement on Agriculture)
that Pakistan provided extra subsidy to wheat producers in
the form of higher wheat support price”, a source in the
ministry of commerce confirmed.
To support growers and build on stocks the government
procured 6.7 million tons of the current crop, according to
data provided by Wheat Commissioner Office in Islamabad. The
covered storage capacity maintained by the government is
said to be four million tons. The capacity is just about
enough to store the last year’s stock only and the crop
procured during the current season has not been stocked at
silos and storages.
The government officers in the food ministry and other
departments admitted that storage facilities are
sub-standard.
When contacted, Nazar Gondal said the government was aware
of the situation and would announce some schemes to upgrade
and build modern storages next month.
Some relevant people pointed to a nexus of widespread
corruption in the food departments and the federal ministry.
There were vague indications of the involvement of
influential personalities in corruption in the wheat sector.
“The better performance of agriculture sector could not be
used to energise the manufacturing sector because of the
government apathy and inefficiency”, a progressive farmer
from Multan commented.
The incidents of atta (wheat flour) riots, violence at
utility stores, long lines at sale points and attacks on
certain godowns (storage sites) in cities of Karachi, Lahore
and Quetta two years back are still fresh in collective
memory of the nation. The lack of policy or snags in its
implementation, particularly to improve storage capacity of
agriculture produce, continue to pose risk to the food
security in a populous country of 170 million people. The
sudden spike in commodity prices in 2007-08, induced
countries like China and India, to focus on building up
their buffer stocks of essential food commodities.
The dividends of better wheat crop could have been utilised
had the government been equipped with a policy and
streamlined institutions. “Sadly, half way through the
season, the government seemed to be groping in the dark, yet
to move beyond committees and commissions”, commented a
disgusted economist.
There is a need to improve wheat economy by cutting on
wastages, diverting excess supply to value added sector and
improving competitiveness in the sector by streamlining
supply chain.
Consumers and producers of agriculture commodities take
turns to suffer in consecutive years.
“The fact is that the powerful trader-babu nexus finds ways
to mint money in situations of both abundance and scarcity”,
commented another commodity market watcher.
According to Agriculture Policy Institute’s Wheat Policy
Analysis for 2009-10, Pakistan is the 8th largest wheat
producer in terms of area and 6th in production but holds
49th position in terms of yield.
Courtesy: The DAWN
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