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Wheat crisis and statistics
By M. Shafi Niaz
The continuing wheat crisis can be traced, among other
things, to lack of authentic estimates of production, and
inaccurate determination of requirements.
 Proper
planning for imports and exports can be done only when
supply and demand situation is fairly accurate.
In Minfal, APCom has to give more attention to these
aspects. Needless to say that economic analysis work in the
ministry needs to be improved and strengthened considerably,
particularly in terms of manpower and their ability.
Too many changes at the Secretary's level, lack of decision
making ability, interest, and understanding at higher level,
in the past, could be some of the reasons for this state of
affairs.
The government initially fixed the wheat target of producing
20 million tons from 8.18 million hectares for the crop sown
in 2003 and harvested in 2004. Against this, the Federal
Committee on Agriculture (FCA) revised in October 2004 the
estimates to 19.5 million tons from 8.2 million hectares.
Punjab is said to have produced 15.64 million tons from 6.26
million hectares giving a yield of 2.5 tons/hectare.
The support price of wheat was raised to Rs350 per 40kg, up
by Rs50 from that of the previous year. As about 80 per cent
of wheat production is raised by Punjab so any variation in
its production affects national production.
The information available from various sources indicates
that the yield per acre of the crop harvested in 2004 was,
on an average, about the same as that of the last year in
main growing areas of Punjab.
On this basis, the production from Punjab would have been a
little over 12 million tons. The production of wheat of
other provinces, as given in the FCA meetings, comes to
about 3.9 million tons.
Therefore, the country's total production would be little
around 16 million tons i.e., down by about 3.5 million tons
than the projection of 19.5 million made by the FCA. APCom
had worked out the requirements varying from 19.8 to 21.6
million tons based on the annual per capita consumption of
107 and 119kg, respectively.
Thus, the gap between demand and supply is anything from 3.8
million to 5.6 million tons. According to Minfal, only about
200 thousand tons was carried forward from the previous
year.
The government had planned to procure a little over six
million tons (both by the Food Departments and Passco), but
it could only procure about 3.5 million tons. It is said
that as the private sector was also allowed to enter the
market, which purchased approximately one million tons, so
the target remained unachieved.
Because of the shortage of crop, the free market prices were
ruling higher than the support price. According to support
price policy concept, if open market prices are higher than
the support price, the government is not supposed to
interfere in market operation but to allow farmers to reap
the benefit of better prices.
However, the Punjab government, as reported in the press,
not only forcefully procured wheat from the farmers but also
banned the inter-provincial and even the inter-district
movement; the action was presumably to arrest smuggling from
the border provinces to neighbouring country and to
facilitate the government in its procurement drive.
This created panic in the country. The wheat and flour price
shot up to a level never experienced before. The deficit
provinces started protesting against the action taken by
Punjab.
The situation was getting out of control, when the finance
minister/prime minister took a wise, though belated, action
and directed the authorities concerned to import five
hundred thousand tons of wheat in the first instance and
another five hundred thousand tons at a later stage.
These imports were not considered enough to arrest the hike
in the consumer's price. Therefore, the Prime Minister
ordered the import another five hundred thousand tons of
wheat over and above the one million tons already ordered.
It is quite doubtful if this import of 1.5 million tons
would be able to stabilize the prices. The months of
February to middle of April are very crucial and it is in
these months that prices tend to rise because the reserve
stocks generally get depleted.
It is the writer's view that the government would have to
import another 1.5 million tons if the prices at the end of
wheat year have to be maintained at affordable level and
some reserves must be built for the following year.
At present, the prospects of next year's wheat crop (to be
harvested in 2005) are quite bleak as water shortage during
the coming Rabi crop is going to be about 45-47 per cent
less than the normal.
Let us hope that the slogan "Produce More Wheat" instead of
"Grow More Wheat" shows its positive impact on the size of
the crop. The government has to be sensitive to meeting the
needs of the population for such an important strategic
commodity.
With such a commodity, it is better to be on the "safe
side", rather than to remain on the "conservative side", as
it can have quite serious political repercussions.
In a situation like the one the country has experienced
during the last one-year, prompt decision and action need to
be taken to meet the critical shortage of a strategic
commodity like wheat.
Presently, the provincial governments make their estimates
of crop production on the basis of its Crop Reporting
Services and then pass on to the Federal Bureau of
Statistics (FBS), who consolidates these and forwards to
Minfal, which in turn releases it to the public.
Earlier, there was some mechanism in the FBS for rechecking
these estimates but with the passage of time; it seemed to
have faded away. Presently, there is no such system in
Minfal. If Minfal had given some credibility to its
Technical Committee's report of July 2003, the crisis could
have averted.
Punjab seems to be loosing its credibility in crop
estimating. There is an urgent need for the improvement of
procedure for estimation of the crop size not only by Punjab
but also by other provinces.
The Crop Reporting Services (CRS) too, have to be given more
freedom of action and should not be influenced by the
politicians and bureaucracy. The methodology used by the
CRS, which has been in vogue for more than half the century
has to be reviewed. More effective supervision of the field
staff is called for.
The FBS and Minfal need to revive the system to scrutinize
the estimates received from the provincial governments.
Minfal, in particular, has to develop its analytical
capacity for the purpose. Provincial experts have also to be
encouraged for such analysis.
Determination of the demand side has to be improved. It may
be advisable to set a group of experts to review the present
system to suggest improvements. Without having reasonable
estimates of production and requirements, planning for
imports and exports remains a difficult problem.
It would be helpful, if a Wheat Crop Production Assessing
Committee, on the pattern of the Cotton Crop Assessment
Committee, is set up to give periodically the idea of likely
production. This would be of indicative nature to help the
authorities concerned in planning the likely import/export
programme.
Past experience has shown that the "free marketing" system
has not worked under our conditions. The experience of wheat
and fertilizer marketing are glaring examples of the failure
of this system.
The implementation of the support price declared by the
government should be carried out efficiently and effectively
in its true spirit; otherwise the government has to face the
criticism.
Courtesy: The DAWN
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