Wheat woes

The fields of Pakistan are changing into hues of gold as harvesting of the major staple crop, wheat, began in late March in Sindh. Harvest is presently on the verge of completion in the northern Punjab area. In a special report about Pakistan, Food and Agriculture Organisation (FAO) expects the countrys total wheat production to reach 25 million tons this year, somewhat above last years flooded, affected crop and the second best on record.
Despite excessive rains in May, mostly in the northern parts of the county, they led to decreased yields slightly. But the overall production improved owing to the increase in acreage yield due to early maturity of cotton crop, favorable weather conditions pertinent for healthy grain and last years wheat price hike.
However, what is disconcerting is that in spite of a substantial bumper crop, wheat and wheat flour prices are on an upward cyclic journey. The city of lights, Karachi, was subjected to the highest wheat flour price, averaging around Rs45 per kg compared to Lahores average price tag of Rs39 per kg. While the retail price of wheat flour soared to 8.6 percent year-on-year in Quetta.
The FAO report states that the high prices of main staple wheat are also a contributing factor for food insecurity, especially of the low-income households. This is quite spot-on as wheat products witnessed significant increase in price of about 18.76 percent during 11M FY14. However, the initial concerns about low level of stocks, underpinned prices in prior months.
The support price for wheat crop 2013-14, was fixed by the government at Rs1,200 per maund. Punjab upheld this support price of wheat procurement. But at the time of harvesting, the KPK and Sindh governments one-sidedly increased the rates to Rs1,250 per maund, creating severe distortion in the wheat market, which profited traders and middlemen while negatively impacted on poor consumers.
Inching up in this support price is justified owing to costly fertilizer, pesticide and all the more expensive water to saturate crops. Moreover, the Punjab government has imposed a ban on the movement of wheat from Punjab to KPK on the grounds that wheat is smuggled out of Pakistan into Afghanistan creating shortages and translating into higher prices for retail consumers.
Going forward, the next few weeks remain critical as the support price of Rs1,250-75 per 40kg is estimated to rise after the food department finishes its procurement drive, inflating the retail prices further.
The holy month of Ramazan has already kicked off and it seems like the hopes of people to experience a diminution in prices will remain a mere dream.