Wheat crisis

Charges of mismanagement have dogged the Pakistan Tehreek-e-Insaaf (PTI) government soon after Imran Khan took oath as the country's 22nd prime minister on 18 August 2018 and thenceforth the country has been rocketed by a series of crises, sourced to: (i) previous administration's flawed policies that accounted for a historically high current account deficit of 18.2 billion dollars (though the inherited budget deficit of 6.6 percent in 2017-18 rose to 8.9 percent by 2018-19 as a consequence of PTI's decisions); (ii) massive rise in utility rates as an outcome of negotiations with the International Monetary Fund which raised input costs to a prohibitively high level thereby constraining productivity, and employment opportunities as well as accounting for an ever increasing erosion of each rupee earned by an average householder; and last but not least (iii) failure to project demand (be it seasonal or not) and take appropriate mitigating measures to forestall shortages that may lead to massive escalation in prices of our major food items, including the staple wheat.

Today, there is an ongoing strong wheat crisis and a moderate sugar crisis whereby the prices of these two locally produced commodities have escalated to beyond what is affordable by the common man. In August 2019, Ministry of National Food Security and Research briefed the Economic Coordination Committee of the Cabinet (ECC) that there were adequate stocks of wheat in the country with 28 million tons in stock against the demand of 25.84 million tons (with procured quantity of wheat 33 percent less than the year before); and recommended that the government ban wheat/wheat flour exports (with the export quota exhausted by July 2019) but to allow exports of other wheat products like fine wheat, suji and maida after prolonged negotiations with exporters. However, by late October 2019, these items were also banned as domestic prices rose. With a complete ban on exports of wheat and products to Afghanistan, smuggling picked up significantly on unfrequented routes across the porous border.

Khusro Bakhtiar, Minister for National Food Security and Research, has claimed that the government has not only reduced cross-border smuggling but that the existing shortage was due to failure of Sindh to meet its procurement target. Sindh, sources reveal, procured only 70 percent of the targeted amount, by insisting that it does not have the funds because the federal government has withheld disbursement from the divisible pool, although disbursements of funds to other provinces too suffered similar delays due to fiscal difficulties of the federal government. Bakhtiar further maintained that there is adequate wheat in the country and once supply lines are restored from stocks held by PASSCO its price would decline shortly; nonetheless the ECC allowed duty-free import of 0.3 million tons of wheat by the private sector till end March claiming that domestic output would be able to meet domestic demand by April.

What must be a source of concern for analysts is the routine dismissal by the PTI government of crises by sourcing them to artificial shortages created by mafia/political influentials with the objective of securing runaway profits; however, a government cannot disclaim its own responsibility in taking decisions that allow for runaway profits to be made thereby raising prices and creating the prospect of socio-economic unrest. The 300 billion rupee emergency agricultural policy whose architect was Jehangir Tareen does not deal with long-standing issues prevailing in the farm sector including taking steps to ensure that a few influential people, unfortunately found in all major parties, do not dominate policy.

It is obvious that serious issues of mismanagement in the country remain, particularly with reference to projecting domestic demand and/or adjusting the allowed exports and in the event of a shortage, to import well in time, an example being the failure to import LNG in time to deal with the gas crisis.