Looming wheat crisis

30 Sep 2020

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PAKISTAN could face a major wheat crisis by the end of December. The warning has come from the National Assembly Standing Committee on Commerce, which also pointed out that serious mismanagement in planning of wheat imports had caused shortages of the commodity, leading to a big hike in flour prices. The government had allowed the Trading Corporation of Pakistan and the private sector to import wheat towards the end of July in the wake of its countrywide shortages, and later waived all taxes and duties to make imports economically viable and release the upward pressure on its prices. Yet the imports remain slow.

Although the private sector has imported over 300,000 tonnes of wheat and booked orders for another million tonnes or so, the TCP is yet to place its first order. A top TCP official told the committee that the corporation, which is supposed to purchase 1.5m tonnes of cereal from the international market to fill the supply gap, had to cancel the tenders floated earlier this month because of the high rates quoted by suppliers. The new bids received for 300,000 tonnes of wheat are to be opened on Oct 5, which means the first TCP wheat shipment will not reach here before the end of October even if everything goes according to plan. Until then, prices are expected to stay up despite private imports. The consumers, especially low-income households, are forced to pay a higher price for their staple food because of delays in imports on account of the government failing to predict the market despite less than targeted crop output last spring. Even when it was clear the country was facing a shortfall of 1.5m tonnes for the current market year and prices had begun surging sharply, it did not push the TCP to speed up the import process. The TCP authorities will have to do exactly that if the government wants to prevent the present shortages from morphing into a major crisis in winter.

Published in Dawn, September 30th, 2020