THE changing weather pattern of major food-producing countries such as America, Russia, Australia and even India has overshadowed the world grain forecast.
Likewise variability of temperature and rainfalls in Pakistan is becoming significant in its impact on local production of food commodities. Besides, a gloomy forecast is considered a big threat to the food security of food deficit countries.
Owing to unfavorable weather, grain production forecast is being revised for major exporting countries like Australia, the EU, Kazakhstan, Russia, Ukraine and the US. The overall production forecast is 8.7 per cent less than last year’s output for these countries.
India is expecting a loss in its grain production by 3.9 per cent over the previous year. The situation in China is however stable. In coming year (2012-13), the global production of grain is expected to fall by four per cent compared to 2011-12 leaving a smaller exportable surplus.
Table-1: Supply Demand Situation of Major Export of Grains (Million tonnes)
The rice market is stable. Current wheat supply is still adequate while maize situation is worrisome. Sugar registered a price gain of 12 per cent due to more rains in Brazil and droughts in Australia and India.
The situation for edible oil, meat and poultry is rather stable. For upcoming crops, drought in India and floods in Bangladesh will affect their supply. The poor output forecast resulted in global food prices soaring by 10 per cent during last month. The prices of sugar, maize, soybean and wheat are mounting, pushing FAO global food price index up by six per cent for July.
The index at 213 in July is, however, still below than the record of 238 set in 2008 global food crisis. Food exporting countries may impose a ban or review their grain exports due to less production. The countries which are heavily dependent upon large food imports and having limited fiscal space along with weaker protective mechanisms will be vulnerable in that situation.
Despite negative trends, it is not yet a crisis situation, according to the Food and Agriculture Organisation (FAO).
Wheat is a staple food in Pakistan. A small segment of society depends upon rice. Other important food commodities are sugar, pulses, vegetables, fruits, edible oil and meat. In Pakistan, food security mainly revolves around wheat. So in national planning, it has the central position.
The production and consumption of wheat in Pakistan hovers around 24 million metric tons. In the last season, Pakistan harvested 23.5 million tonnes. With carryover stock of 3.6 million tonnes, about 27 million tonnes of wheat became available at the start of the new season. Out of this, 9.2 million tonnes is with the provincial food departments and Passco while the rest was with the private sector and households.
From this, a healthy supply of wheat/wheat flour can be anticipated till the harvest of next crops in May 2013. Against the wheat support price fixed at Rs1050/40kg, the open market price was around Rs950/40kg at that time.
However, the present price of wheat in the market is about Rs1100/40 kg owing to price hike in international market which jumped from $262/ton in May to $375/ton in August.
Pakistan has surplus supply in rice. About 6.2 million tons of processed rice was produced in the last season. One-third of this will be consumed locally while two-thirds will be exported. Last year, Pakistan exported around four million tonnes earning over $2 billion.
Currently the prices of milled rice are very much stable in local market.
Gram is a major pulse crop. The situation is worrisome as production of 291,000 tonnes was recorded this year against 496,000 tonnes in the previous season mainly due to bad weather, i.e. drought and protracted frost especially in Punjab. Local demand of gram is around 600,000 tonnes. Due to short supply, the price of gram pulse has gone up by 66 per cent from Rs71/kg in January to Rs.118/kg in August, 2012.
The carryover stock of one million tonnes and production of 4.7 million tonnes in this market year made 5.7 million tonnes sugar available in the country against local demand of 4.5 million tonnes. Despite export of one million tonnes, sugar supply is comfortable for the ongoing year. Presently, sugar price in local market is around Rs56 per kg which is quite steady.
Pakistan produced around 23 per cent edible oil against its requirements of about 2.8 million tonnes in 2011-12. The supply demand gap is usually met either by imports of oilseed (10 per cent) for oil extraction or direct edible oil imports, mainly palm oil.
Poor sunflower production in the country is compensated by good harvest of cottonseed, so local supply of edible oil appears improved.
However the prices of palm and soybean oil are on the rise in international market which may increase import bill for the ongoing fiscal year.
For commodities like vegetables, fruit, meat and poultry products, the situation is dependent upon local supply and demand and hence comparatively less affected by global trends.
The food supply demand situation is quite comfortable in Pakistan at-least for the current year. At present it is very difficult to predict the situation for next year.
However, the following are the important factors which can play important role in developing any situation in the country with regard to national food security.
Any irrational decision regarding trading of food commodities by ECC may repeat the situation of 2007-08 food crises. So extra care should be taken and decisions made after thorough analysis. For that matter, the role of Agriculture Policy Institute working under Ministry of National Food Security and Research will be very important in scrutinizing ECC summaries. It is an urgent need to restore/reactivate the Federal Committee on Agriculture/Food to oversee the production of commodities at national level.
Pakistan had a bad experience in 2007-08 when in spite of good harvest of wheat; it was struck by food crisis largely because of illegal cross border movement of wheat to Afghanistan and even up to Central Asia. Pakistan has long porous borders. Food prices in Pakistan are low especially compared to Afghanistan. For example, price for one kg wheat is Rs28.6 in Islamabad against Rs51 in Kabul. Since trade for food commodities is not free between the two countries it is a big attraction for illegal traffickers. At present, live animals in large numbers are being smuggled to Afghanistan and Iran. This needs to be monitored.
The level of production of the next wheat crop will actually determine the level of food security for Pakistan in the coming days.
Crops are highly dependent upon the supply of good quality seed, fertiliser, irrigation water and favourable weather conditions. Wheat has no exceptions in this regard. For seed, there is a set pattern that will work as usual. For fertiliser, Pakistan has been becoming insufficient to cater its need from domestic supply largely due to restricted gas supply to manufacturing plants.
In this situation timely import of fertiliser for next Rabi will be required. Agriculture credit may influence the purchase of all necessary inputs. So role of lending banks will be important. Weather is the single most important factor for wheat production. Good winter rains in October, December and February coupled with favourable temperature especially during the months of March and April may have profound effect, more than any other production factor, on wheat productivity and hence the country’s food security..
The marketing mechanism is currently in vogue i.e. procurement by provincial food departments on support price is faulty giving low prices to small farmers. It needs overhauling especially by removing the culture of gunny bags, a necessary evil, required for sale of wheat at public wheat procurement centers.
Modernizing the set up of grain storages in silos with advanced systems may on one hand obviate the need of gunny bags while on the other hand boost the national grain storage capacity, very much required under the current delicate food security situation.
Major issues of water in Pakistan include scarcity, inadequate storage capacity (only nine per cent compared to 40 per cent world average), extensive seepage in conveyance infrastructure, inadequate arrangements for rainfall harvesting, and inefficient use.
To improve supply of irrigation water, Pakistan is following three pronged strategy, i.e. increasing water storage capacity by construction of new dams, improving water conveyance efficiency by lining of canals and water courses and increasing water use efficiency in fields by adopting high efficiency drip and sprinkler irrigation systems.
Most of the public sector investments for water are going in these priority areas. Last year about Rs30 billion were invested in water sector from federal PSDP.
The writer is the Chief, Food and Agriculture, Planning Commission of Pakistan
By Dr Aamer Irshad