While a recent FAO report stresses that the government’s wheat policies were of low efficiency, with most of the benefits of procurement and distribution accruing to flour millers and traders, a top official of the food ministry believes Pakistan should have a comprehensive wheat policy that is beneficial to growers as well as consumers.

Unless we have a wheat policy, ad-hoc policy decisions on the export and import of wheat would continue, stresses Seerat Asghar Jaura, secretary of the national food security ministry.

The Food and Agriculture Organisation is of the view that the existing system of procuring and selling wheat clearly creates significant market and investment distortions and results in significant loss to the national economy. The government carries the significant burden of ‘double pricing’ when wheat sale prices do not reflect procurement, financing and storage costs. The volume of wheat purchased by government agencies could be rationalized to allow greater private sector investment in wheat storage and trade in the future.

Mr Seerat Asghar Jaura blamed the 18th amendment for creating distortions in the agriculture sector. The federal government and provincial governments are not on the same page.

Any support programme aimed at increasing wheat productivity must take into account existing constraints in the wheat supply chain, especially the lack of adequate storage facilities

Citing example, he said, the Federal Committee on Agriculture (FCA) met after a gap of two years due to lack of interest on the part of provinces. There is no restriction on the import of wheat under the Import Policy Order of 2013, he explained, saying that under the WTO, Pakistan has committed not to curb wheat import.

About the recent import of inferior quality of wheat from Russia and Ukraine, Mr Seerat Asghar said it was due to the absence of a wheat policy. The wheat support price is an ad-hoc decision. In the international market, the cost of 40kg wheat has come down to less than Rs1000, whereas the government is buying wheat this year at the rate of Rs1300 per 40kg.

The secretary admitted that due to higher domestic price of wheat, Pakistan could not export sizeable quantity of wheat to the neighbouring countries. Permission for export of wheat has been given not only to the private sector, but also to the government.

After a consecutive two years of good harvests, Pakistan is poised to witness another year of bumper wheat crop, and official estimates put production over 25m metric tonnes this season.

According to the ministry of national food security, wheat consumption in Pakistan is below 20m tonnes annually.

With intensified crop production, Pakistan could increase annual wheat production to 32.5m to 38m tonnes from the area currently under cultivation. However, any support programme aimed at increasing wheat productivity must take into account existing constraints in the wheat supply chain, especially the lack adequate of storage facilities.

As wheat purchase, transportation and storage are financially supported by the government and taxpayers, wheat traders, flour mills could be encouraged, to invest in improving infrastructure. They can simply maintain minimum wheat stocks while the government pays for wheat storage and associated losses.

Currently, the government uses commercial loans to finance the purchase, storage and sale of wheat and other commodities that it considers important for food security. The government procurement agencies and provincial food departments use government guarantees to obtain loans from private banks.

While the grain warehouse receipt system is being promoted by the State Bank of Pakistan , the banks and the private sector should seize the opportunity as agriculture is turning into a pivot of the country’s economic development and needs to be modernised,

An FAO report says that there is no national wheat standard in Pakistan. Wheat quality is verified against the fair average quality (FAQ), which specifies quality parameters such as foreign (non-food) matter, and damaged or shriveled kernels.

Procurement employees of government food departments have to adhere to FAQ standards when buying wheat. The FAQ scheme also provides guidelines for checking weight. The advantage over a typical wheat standard is that variations can be introduced to the FAQ scheme every year.

Published in Dawn, Economic & Business, April 27th, 2015

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