News in the media suggests that the double whammy delivered by oil prices coupled with devastating rain fall in Punjab during peak harvest season has apparently sent flour prices in a panic mode. That the downpour has come when Ramazan consumption spree is in full swing doesn’t help either.

But numbers tell a different tail. No doubt, flour prices have climbed up in recent months. But look closely at the CPI numbers, and one discovers that the peak is more a function of peak consumption of seasonal dips in stock rather than an indication of looming flour crisis.

Recall that in “Hindsight is always 20-20” (published in this space on April 22, 2019); BR Research had noted PASSCO, the federal wheat procurement agency, is currently sitting at stocks of close to 5 million metric tons. Rainfall has most affected the southern Punjab districts; whose combined annual production is no more than 8 million tons.

Add to this the two to three percent projected decline in area under cultivation in Sindh over previous year. While the full extent of damage from rain is yet to be assessed, even if as high as half of the output from southern Punjab districts is wiped off (an unlikely outcome), annual production will still come close to 21 million tons, against target output of 25.7 million tons.

Subtract annual exports of close to 0.5 million tons, mostly to Afghanistan, and cumulative availability of wheat will still be nearly 26 million tons, which is approximately same as annual estimated domestic requirement at 125 kilos per capita. And this does not even take into account the off-season sowing that takes place alongside kharif cash crops. In summary, yes wheat and flour prices have followed an upward trend for the past twelve months.

No official estimates of actual extent of damage from rain so far exist. And no, there are no signs of full-blown wheat crisis in the country yet.