Brewing Wheat Crisis in Pakistan: A Fact or Fiction

Many Pakistanis, especially people living below the poverty line, are facing the brunt of brewing wheat crisis in the country. The news being printed in newspapers and aired by television channels are adding to the confusion, rather than easing the tension. However, it may be said in the simplest words that the brewing crisis is the outcome of gross mismanagement by the government.

The story started with the failure of government in timely procurement of the staple food. Lack of storage facilities, ill-timed export and now the rush to import the commodity, clearly indicates that those at the helm of affairs are either completely ignorant of the market dynamics or are being used by the groups having vested interest.

Few years back Pakistan had joined the club of wheat exporting countries. Since then, the country has been producing more than 25 million tons wheat every year, which yields over one million tons exportable surplus. However, huge quantities are smuggled to Afghanistan and India, which is known to all and sundry.

As stated earlier, the government failed in making sufficient purchases due to limited availability of funds. Added to this has been lack of storage facilities, which led to keeping the produce in open or facilities not fit for storing food staple.

The data shows that up to an average 20% of total wheat produced in the country goes stale or rendered unfit for human consumption because of poor storage facilities. It is feared that this year even higher percentage has gone stale. The government hardly has any clue of the commodity still available in the country.

According to news reports, the country still has more than 4 million tons wheat available in the country. Therefore, there is no need whatsoever to import it and the decision to import 0.3 million tons wheat is only a hoax call. However, some analysts do not accept government’s claim of having 4 million tons wheat in warehouses.

Analysts say that the total storage facility on which the government has some control is at the best 6 million tons. Keeping in view the arrival of the new crop, the capacity in government’s control can’t be more than 2 million tons. The remaining quantity could be with the private sector, mostly with the flour mills.

Analysts still ask a question, is there a shortage? It is feared that significant stocks may not be there because of rampant corruption in the public sector. Some analysts insist that substantial quantity may have either gone stale or pilfered. However, others believe that bulk of the quantity may have not disappeared and still available with the hoarders, if the first point is true than the situation demands thorough probe.

Even a cursory look at the prevailing situation establishes a fact that wheat procurement and storage in the country suffers from gross mismanagement. The government hardly buys around 6 million tons wheat because the country does not have more than this storage capacity. The remaining quantity is bought by the private sector, mostly flour mills and feed producers. Therefore, it may be inferred that the government hardly has any clue of the quantity of wheat still available in its designated warehouses.

It may also be said that the biggest beneficiaries of the current crisis are those who are hording the stock. As the investment opportunities have shrunk in the country, due to the drive against money laundering, people having ample ‘black money’ are holding huge quantities of wheat. They are just waiting for an opportunity to mint money.

Now coming to the key question, can import of 0.3 million tons wheat help in overcoming current crisis? New crop is expected in next two/three months and during this period stock of up to 6 million tons is required. Even if government’s claim of 4 million tons stock is accepted, decision to import 0.3 million tons appears more like a joke.

Making mistakes is part of human nature, but people must learn from the mistakes. Since smuggling of wheat to Afghanistan and India is difficult to contain, because of the porous borders, export of wheat to these two neighboring countries must be allowed on humanitarian grounds, to contain smuggling.

It is no secret that Pakistan suffers from lack of modern grain storage silos. There is a need to construct silos capable of storing minimum 20 million tons wheat. There is also an urgent need to commence operations of collateral management companies for the accreditation of warehouses.

Interestingly, State Bank of Pakistan (SBP) offers loans for the construction of grain storage silos, but the response has been very poor. According to an analyst the lukewarm response is because of restrictions on free movement of wheat from one province to another province.

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