Procurement shortfall led to wheat crisis: report

Updated April 05, 2020

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The report shows that Sindh procured zero tonnes where its target was one million tonnes, and Punjab procured 3.315m tonnes where its target was four million tonnes. — Reuters/File
The report shows that Sindh procured zero tonnes where its target was one million tonnes, and Punjab procured 3.315m tonnes where its target was four million tonnes. — Reuters/File

KARACHI: Poor procurement effort led to the wheat crisis in December and January, the inquiry committee looking into the causes of the price spiral in the staple food product says. “At the outset, the committee noticed that the public procurement of wheat fell short by a whopping 2.5 million tonnes, 35 per cent less than the target” the report says.

The report shows that Sindh procured zero tonnes where its target was one million tonnes, and Punjab procured 3.315m tonnes where its target was four million tonnes. The federal effort is led by the Pakistan Agricultural Storage and Services Corporation (Passco) and it procured 0.679 tonnes of wheat against a target of 1.1mn tonnes.

“Other factors fuelling the wheat crisis were contributing factors.”

The inquiry committee was constituted on Jan 22 on order of the prime minister to look into the causes of the wheat price spiral that gripped the country in December. It had three members, with the FIA DG as its convener.

The shortfalls in procurement aggravated an already tight supply position in the country, the report says. Carry-forward stocks from the previous year as well as production in the fiscal year 2019 were the lowest in five years, coming in at 3.777m tonnes and 24.479m tonnes, respectively.

In such a situation, the authors say, Passco should have been ordered to raise its procurement target. Passco’s own carry over stocks, at 1.33m tonnes were the lowest they had been in five years in 2019 when procurement began, and called for a higher procurement target as well as more vigorous effort to build its reserve to 2.5m tonnes, which is the lowest they had been at for the previous two years when all procurement targets were met.

“Instead Passco unusually failed to meet its procurement target by a margin of 40pc” the report finds. “Surpri­singly the Ministry kept telling the ECC in May and June 2019 that Passco had met its procurement targets.”

Not only that, the Ministry National Food Security and Research (MNSF&R), which oversees Passco, also recommended to the government that the wheat stock position is comfortable and exports should be allowed. “The ministry failed to grasp the market situation” of tight supply position due to low carry over stocks from the previous year, low crop production in current year, and poor procurement effort. “[A]s such their recommendations to Federal government were routine and misleading”.

The report holds then Secretary of MNFS&R Hashim Popalzai, former MD of Passco Muhammad Khan Khichi responsible for this.

In Punjab the report finds that the procurement effort was hobbled by high turnover in the food department, which saw four secretaries rotate through the office in one year, and all District Food Controllers were rotated thrice in the same year. The procurement effort began 20 days late, and the food department “failed to exercise control on flour mills which resorted to profiteering campaign as they sensed the government was ill-prepared to handle the wheat demand and supply chain.”

Wheat pilferage increased and the government lost control over wheat supply situation as private and government stocks “started heading in every direction, without being accounted for”.

The report blames former Food Secretary, Government of Punjab, Naseem Sadiq and former Director Food Dr Zafar Iqbal for these serious lapses. It also cites provincial minister food, Samiullah Chaudhry, for “not devising any reform agenda to address the chronic ailments” in the food department.

In Sindh, where the wheat crisis actually began before spreading to the rest of the country, the report says the provincial authorities could not furnish any explanation for why they decided to not carry out any procurement at all. The Sindh government claimed to have 0.8m tonnes of wheat in stock, but the report says these were afflicted with “massive pilferage and theft”.

“The Food Department Sindh failed to intervene in the market early when the prices of wheat started rising as early as August 2019” the report says, and delayed releasing wheat from its stocks till October, giving hoarders a virtual free pass.

Responsibility for the decision to not procure any wheat could not be fixed individually, the report says, “because the decision was not taken by the cabinet.”

Published in Dawn, April 5th, 2020