KARACHI, Jan 2: The earthquake, which rocked the northern parts of Pakistan, may hit the wheat production capacity of NWFP this year. The State Bank’s first quarterly report pointed out that the shortfall in NWFP might be attributed to the chaos created by the earthquake.

The government has set a target of 22 million tons for 2005-06 but the area under wheat cultivation has dropped by about one per cent. The wheat production last year rose unexpectedly and the yield was much higher than the target like it happened in the case of cotton production.

The government had set a target of 20.2 million tons of wheat for 2004-05, but the yield went up to 21.6 million tons, giving hopes for more production in the following year.

The SBP report says that wheat cultivation has been completed on an area of 6.2 million hectares, which represents 74pc of the 2006 target. “This is 0.9 per cent lower than that achieved in the corresponding period of 2005.”

While Sindh recorded an increase of 12.9 per cent in the area under wheat, this was offset by Punjab and NWFP, which recorded declines of 1.2 per cent and 6.9 per cent, respectively, compared to the previous year.

“Late cotton picking, slow harvesting of rice and slow sugarcane lifting are the main reasons for a slowdown in wheat sowing in Punjab.”

The wheat production has been an essential priority of the government as its lower production increases food prices, thus pushing up inflation (Consumer Price Index). On the other hand, the low production could be a burden on foreign trade accounts. The import of wheat used to put pressure on import bills already under stress due to ballooning pressure of petroleum prices on the international level.

In the last couple of years, wheat flour prices have increased by around 60 per cent because of shortfall and hoarding of wheat by the private sector. The State Bank had allowed credit facility to the private sector for purchase of wheat, which resulted immediately in black marketing of the commodity and price hike.

Another major reason was the slow wheat import by the Trading Corporation of Pakistan that nullified government’s effort to bring down wheat prices through import.

Flour millers said that the private sector could again find ways to exploit the need of the commodity “if the production suffers this year”.

“The government can control the wheat shortage by putting restrictions on free flow of the commodity towards Afghanistan,” said Anjum Jalil, a flour miller.

“Wheat and flour can be exported to Afghanistan through the checkpoints declared legal by the government,” he said, adding that the smuggling of the commodity went unchecked through many other points on borders of the two countries.

No data is available as to how much wheat (also flours) Afghanistan consumes but flour millers estimate that it may be around 1.2 to 1.5 million tons. This is in addition to the wheat the country already produces, but the production is on decline because of rapidly increasing cultivation of poppy in that country. A UN report identified that the area under cultivation of wheat was being replaced with the poppy in Afghanistan.