Wheat producers and consumer are in a fix once again in Sindh. The surge in prices of wheat and flour continues as the government is reluctant to release its stock for millers and chakki (millstone) owners, fearing wheat would be smuggled to Punjab and Khyber Pakhtunkhwa and then Afghanistan.

The wheat crisis is an annual story that brings the food department’s performance, rather its viability, into question. Sindh’s ruling party that finds its roots chiefly in the rural area among the farming community, with many ministers having an agricultural background, is unable to fix things in the department in the last 12 years. More distortion in the market means more ill-gotten money for unscrupulous elements within the government.

A clear and hassle-free procurement process continues to elude farmers. The government’s subsidy from taxpayers’ money and meant for small- and medium-sized farmers is somehow pocketed by lower- to higher-level officers and even ministers with the active connivance of middlemen. Small- and medium-sized farmers sell their crop in the market at lower prices to keep their economy going.

Interestingly, the food department handles only the single crop of wheat in a year with a full-fledged ministry yet it fails to handle it transparently. Wheat misappropriation and references by National Accountability Bureau have become a matter of routine.

The food department handles only a single crop — wheat — in a year with the support of a full-fledged ministry yet it fails to handle it transparently. Misappropriations and references by NAB have become a matter of routine

The Sindh food department missed its procurement target of 1.4 million tonnes this year. It attributes it to Covid-19 issues in March onwards. The coronavirus situation did hamper government’s business but realising the problem’s gravity, the Sindh government had eased off lockdown in April’s first week for the agriculture sector to avoid food insecurity.

But the department could procure 1,236,000 tonnes of wheat in 2019-20. This includes the substantial quantum of wheat that it forcibly got recovered from hoarders’ godowns with the rangers’ assistance to meet the procurement target. In some cases, farmers like Nabi Bux Sathio claim, wheat meant for seed purposes by seed companies and farmers was seized during the crackdown.

Wheat producers, concedes Mr Sathio, fetched a better price (between Rs1,500 to Rs1,600 per 40kg) at the beginning of 2019-20’s harvesting season, starting in the Mirpurkhas division. As crop started reaching the market from other districts, prices began to plummet and farmers on average received Rs1,100 to Rs1,200 per 40kg against the official Rs1,400/40kg price.

The food department’s procurement centres couldn’t start full-scale operations, prompting farmers to turn to private buyers and traders — hoarders and stockists — to sell wheat and get cash payments. This year, the department even waived the condition of form-VII (essential revenue document) to be produced by a farmer to sell his wheat. And the food department was free to buy wheat from ‘anybody’ under its liberal policy. Still, it failed to get 1.4m tonnes of wheat and ended up missing the target.

Sindh’s procurement target was fixed at 1.4m tones in 2019-20. It had to be revised downward at 1,250,000 given market conditions. The 1.4m tonnes target was first fixed in 2016-17 and then 2017-18. Otherwise, it has varied between 0.9m-1.1m tonnes considering the improvement in grain production and crop acreage every year. The storage capacity of food godowns — 850,000 — has not been enhanced for a long time and the remainder of total procured crop is preserved in mills’ premises.

The province has produced a wheat crop a little over its production target of 3.8m tonnes but growers believe that the crop is sold to traders in the market and it is stocked for their own vested interests. It was bought by Punjab-based traders also.

Read: Sindh ministers reject centre’s claims, blame Islamabad for wheat crisis

Usually, a stock of 300,000 tonnes is considered safe for strategic reserves to stabilise the market if a wheat shortage occurs. As the government decided against procuring wheat in 2018-19, no carryover stocks existed in 2019-20. A fraction of a few thousand (26,000) tonnes of grain from past years is, however, with the department to add to 1,262,000 tonnes of 2019-20 storage.

The president of the Sindh Chamber of Agriculture and ruling party’s staunch supporter Miran Mohammad Shah questions food department’s working. “The food department will have to be efficient. We have been witnessing it for a long time but the department’s working hasn’t improved,” he argues and believes reforms are needed. “For how long farmers will keep suffering. What else will the food department do if it can’t manage a single crop efficiently?” he asks.

A Sindh food department officer says last year Sindh’s peak releases of wheat stood at 1.2m tonnes before the new crop’s arrival. Till August, the food department didn’t decide to release wheat to flour mills and chakki owners for flour production though wheat and flour’s prices continued to jack up.

One kilogram of flour produced at a chakki in Sindh’s second-largest urban centre was Rs65 as a 100kg wheat bag was bought at Rs5,100 from the market, according to chakki owners’ association representative, Haroon Arain. Flour’s price was Rs44 to Rs45 per kg in April when a 100kg wheat bag was bought at Rs3,300. He calculates Rs12.50 as overhead cost of a kg of flour production.

Sindh government fears it if its releases stocks for flour mill and chakki owners, wheat would be smuggled to Punjab or Khyber Pakhtunkhwa and subsequently to Afghanistan as borders remain porous. In the meantime, it expects around one million tonnes of wheat from Ukraine to reach by August’s end and it would lessen the pressure on the market.

“Punjab’s stocks in the private sector were exhausted early and their government started releasing wheat from its godowns. So, there is a demand for wheat in Punjab thus the surge in price. If we release [subsidised] wheat of Sindh now it will be bought by traders from Punjab to capitalise on their market while we will end up facing shortage of flour in the Jan-Feb period,” says a senior food officer.

Sindh Abadgar Board vice president Mahmood Nawaz Shah asserts such market distortions suit the food department. “It is an irony that growers get a lower price for their produce whilst consumers pay a higher rate to buy a kilogram of flour. Who benefits? It is only the food department officials who enjoy. We have a food department for the heck of it,” he says.

He adds that the department fails to control smuggling, fails to ensure transparent procurement and fails to transfer subsidy to targeted farmers. He says the government must release its stocks to deflate the price given the anticipated arrival of Ukraine’s wheat. “No reforms are seen in the food department although it has been devolved to ensure food security,” he remarks.

Pakistan is committed to achieving the United Nation’s Sustainable Development Goals (SDG), one of which is zero hunger. The Sindh government has set up an SGD Support Unit. Given its sub-targets and indicators, this goal is directly related to the agriculture sector. One wonders whether Sindh can achieve this or other goals concerning the agriculture sector with such a pathetic performance on the food department’s part.

Published in Dawn, The Business and Finance Weekly, August 17th, 2020