Wheat crisis

Published May 8, 2022

THE looming wheat supply gap in the country now appears all set to morph into a full-blown crisis over the coming months. The reasons include significant domestic output shortfall and surging international prices in the wake of Russia’s invasion of Ukraine and the ensuing supply concerns. Prime Minister Shehbaz Sharif has been informed that the current wheat harvest is likely to hover around 26.2m tonnes against the target of 28.9m tonnes. Given this situation, the government will need to import at least 3m tonnes of grain to stabilise the market and meet the demand of 30.8m tonnes, despite the carryover stock of 1m tonne. With reports of wheat being smuggled into Afghanistan because of the large price difference between the local and international markets, imports may surpass the estimates. However, market players are insisting that wheat imports in such large quantities may not materialise owing to two reasons. One, the cereal is in short supply globally, because of a poor harvest. Two, Islamabad does not have enough dollars to purchase expensive imports, with the nation’s foreign currency reserves plunging to $10.5bn on the widening trade and current account deficits.

What will wheat shortages and expensive imports mean for the consumers here? The flour millers have already raised their prices in Punjab by Rs11 per kilo based on the open market wheat price of Rs2,200 per 40kg after the termination of official releases. The Punjab government had until now been providing wheat to the millers at the subsidised price of Rs1,950 per 40kg, which was further slashed to Rs1,600 for the first 20 days of Ramazan. The flour prices are likely to rise further if the government is unable to control smuggling and take action against hoarders, who would want to take advantage of the projected shortages and difficulties in imports. The flour scarcity in the market and the high price of the commodity will increase food insecurity in the country, especially in the more backward and poorer districts of the country, unless the government proactively ensures its availability at subsidised rates. It is unfortunate that Pakistan, which was self-sufficient in wheat production until a few years ago, is now persistently facing shortages and is forced to import large quantities to meet its requirements every year. The situation calls for urgent action to tackle the issues of water shortages, urea unavailability, poor farm management practices, climate change, etc that are bogging down our agriculture sector.

Published in Dawn, May 8th, 2022

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