The common and poor citizen only sees the flour prices taking a toll of his budget and who can he blame but the government. The true picture this year has not only been dramatic, but caught nearly everyone scratching his head.
The trouble started with the government believing that production exceeded their target of 23.5 million m.t., allowed 500,000 m.t. exports. No one catered for a host of "Bullish Factors" coming into play. While the trade had exported just 366,000 m.t. prices started to rise in the market. The underlying bullish factors for wheat prices were overwhelming, the least of which were that possibly production finally missed the target by 5-7 percent.
International wheat prices started to move up slightly, other commodities rose, cross border traffic increased, correct population figures were not accounted for and I believe the use of wheat in nonhuman consumption increased dramatically.
Every stock of 1 bag or 100,000 bags started delaying sales, causing a supply effect on prices squeezing supplies. The unprecedented increase in prices and squeeze in global supplies did not help. Currently the situation is critical. What can we do? We must turn the crises into an opportunity.
How? By not only producing more but exporting at these high prices which are expected to continue for at least another 1-2 years. The farmer must be given radical incentives. The government must reduce its role from farmer to flour miller except for intervention stocks. All this is not easy.
It requires political will, with a high degree of professionalism. I propose the immediate formation of the "Wheat Board" which initially can be a Think Tank and Advisory Body. Fund it well. Let it be fulltime staffed by the government/private sector professionals of the highest caliber.
While this cannot be the answer to our wheat problems today, if we can make serious effort to ensure flour at reasonable rate to Mr Citizen it would be worth our while. The potential exists - but will we do something?
(The writer is Sr. Vice President, Wheat Traders Association of Pakistan.)
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