The government is hoping to avoid a repeat of last years wheat crisis - AP/File photo.

RAWALPINDI The wheat crop in Pakistan which is now in an advanced stage of harvesting in almost all parts of the wheat growing areas, remains in good condition due to favourable rains during the growing season, and this year wheat output is expected at a record level of 23.5 million tonnes, says a new report of UN Food and Agriculture Organization (FAO).

The government has committed to maintaining the 'maximum guaranteed' producer price of Rs950 per 40kg and wheat procurement target has been set at 6.5 million tonnes for 2009-2010.

FAO in its latest 'Crop Prospects and Food Situation' report released on Thursday says food staple prices have declined in the first quarter of the year, but they remain significantly higher in comparison to the long run averages in some countries. The price impact on overall food consumption to the vulnerable group of population is still high.

Citing an example, the report says the retail wheat flour price in Karachi was Rs26.30 per kg in March 2009, 23 per cent below the peak price in August 2008 but still 48 per cent higher compared to that in March 2007.

Overall, high food prices persist in developing countries despite an improved global cereal supply situation and a sharp decline in international food prices, warns the FAO report. The report says this year's world cereal production is forecast to decline by three per cent from the 2008 record, but it would still be the second largest crop ever.

The first forecast of 2009 expects that most of the decrease is expected to be in wheat, mainly due to a significant reduction in plantings in developed countries in response to lower international prices. In developing countries, cereal output could remain close to last year's level.

Food emergencies persist in 32 countries, despite good 2008 cereal crops in many of the countries normally most at risk of food insecurity, alarms the report.

Cereal prices in developing countries remain generally very high — in some cases at record levels, FAO said. Worst affected are the urban poor and food-deficit farmers who are dependent on the market to access food. Moreover, the global economic recession is drying up remittances from family members working abroad that often sustain the food consumption levels of vulnerable households.

An analysis of domestic food prices for 58 developing countries shows that in around 80 per cent of the cases food prices are higher than 12 months ago, and in around 40 per cent higher than three months ago. In 17 per cent of the cases, the latest price quotations are the highest on record.

The situation is most dramatic in sub-Saharan Africa. Domestic prices of rice are much higher than 12 months earlier in all countries analyzed, while prices of maize, millet and sorghum are higher in 89 per cent of the countries compared to a year earlier.

Food prices remain at high levels in other regions as well, particularly in Asia for rice and in Central and South America for maize and wheat.

The cereal import bill for low-income food-deficit countries (LIFDCs) is expected to decline in 2008-09 to 28 billion dollars, down 27 per cent from the previous season's all-time high, with lower international prices and freight rates bringing some relief, the report said.

But the slow pace of both commercial cereal imports and food aid is one of the factors keeping food prices high in poor countries, FAO says. By late March, only 45 per cent of the LIFDCs' cereal import requirement for the marketing years ending in 2009 had been met.