Media Reports Alleging Mismanagement Of Wheat Operations ‘Factually Incorrect’ – Khusro Bakhtyar
‘Meeting the Challenge of Food Security: Top Priority of the Government’
A section of media has recently carried a story alleging mismanagement of wheat operations by the Government causing loss of Rs. 105 billion to the national exchequer, which is factually incorrect. Key facts are as follow:
- The country’s overall wheat requirement for the current year is estimated at 27.6 MMT inclusive of 2.2 MMT of seed and reserve stock. Whereas wheat production during the year stood at 25.8 MMT inclusive of carrying forward stock. Therefore, the government decided to import 2.2 MMT wheat to bridge the demand-supply gap and protect price stability in the market. The gap between demand and supply could only be managed by imports to augment supplies.
- Whereas wheat stocks of PASSCO and the Government of Punjab from the year before were largely deployed to fill the demand-supply gap in the country. It is pertinent to note that PASSCO supplied 0.5 MMT to the government of Sindh as it fell short of the procurement target of 1.2 MMT.
- The media reports regarding the export of 5.5 MMT wheat during 2018-19 are factually incorrect. It is clarified that only 0.59 MMT wheat was exported during that period, whereas the export of wheat during the preceding year i.e 2017-18 was as high as 2.1 MMT. The import and export of wheat in the last several years have been a normal activity in keeping with the domestic stock position. During the period 2009-19, a total of 9 MMT of wheat was exported, while imports were about 1.2 MMT. Therefore, attributing the increase in wheat price due to the export of 5.5 MMT is unsubstantiated.
- It is important to take a holistic view as wheat is harvested in two months, whereas it is released and consumed throughout the year. Therefore, in order to maintain price stability and uninterrupted supply throughout the year, both federal and provincial governments bear the expense of the yearly carrying cost of public wheat stock, which covers mark-up, storage, and incidental costs. During the current year, subsidy expenditure of the federal and provincial governments on locally procured wheat is estimated at Rs. 66 billion. In order to match the release price of imported wheat of 2.2 MMT with the released price of locally procured wheat, the federal and provincial governments will also bear the cost differential which is initially estimated around Rs. 29 billion.
- It is pertinent to highlight the agriculture sector growth from 2013-18 has been very marginal as the crop sector only grew on average 0.4 percent while consumption increased at a higher pace. Hence, per capita, wheat availability has decreased from 140 kg to 124 kg.
- The government is fully committed to meet the rising challenge of food security and enhancing agricultural productivity and for this purpose, a comprehensive Prime Minister’s Agriculture Emergency Program of Rs. 275 billion has been launched. Furthermore, the government has increased wheat support price by 27 percent to incentivize farmers for enhanced production of wheat, whereof wheat support price during the preceding four years remained stagnant at Rs. 1,300/ 40 kg.
NOVEMBER 11, 2020.