In Pakistan, sustainable growth of the agriculture sector stands as per the Government of Pakistan’s officials, vital for food security and rural development. It is a major contributor to employment and foreign exchange earnings. In addition to that it offers industrial raw materials, hence growth in this sector has multiple linkages with the overall economy. The officials also recorded that wheat is the staple crop and it ensures food security in Pakistan. It is cultivated over 22 million acres and accounts for 7.8 percent of the value added in agriculture and 1.8 percent of GDP.
Self-sufficiency in wheat has been an objective of every government and thus always a problem for agriculture experts and policy makers. Wheat is a strategic crop and any shortfall in its production can create an awkward condition leading to political unrest, significant drainage of foreign reserves, rise in prices of wheat flour and pocket shortages in vulnerable areas.
Sources recorded that the Pakistan Flour Mills Association (PFMA) has made an urgent plea to the federal government for permission to import 1.0 million tons of wheat in a bid to avert an impending flour crisis caused by the hoarding of grain during the provincial procurement drive. The Association warns that if action is not taken promptly, the nation will face an artificial scarcity of flour. Statistics showed that the imported wheat if approved, would cost millers around Rs 85-90/kg, considerably lower than the current price of locally grown wheat, which stands at Rs 125/kg. This price differential would translate into a retail price of about Rs 110/kg for the imported wheat flour, as opposed to the current range of Rs 150-175/kg for locally produced flour.
Despite the potential cost advantage, concerns arise regarding the quality of the imported flour against domestically produced flour. While the quality of the latter remains superior, the price of flour (No 2.5) made from local wheat has greater than doubled in present years, standing at Rs 70/kg some 2 years ago as against the present cost of Rs 125/kg. During 2021-22, the area sown decreased to 8,976 thousand hectares (2.1 percent) against last year’s of 9,168 thousand hectares. The production of wheat declined to 26.394 million tonnes (3.9 percent) compared to 27.464 million tonnes produced last year. Wheat production declined due to a decline in area sown, the shortfall in irrigation water and drought conditions at sowing, fewer fertilizers offtake and a heat wave in March/April, though the government has increased the minimum support price to Rs 2200/40 kg this year is aligned to the cost of production.
Sources noted that despite the Prime Minister of Pakistan’s claim of a bumper wheat crop of 27-28 million tons during the present production season (March-May 2023), flour mills remain empty because of the prohibition on millers through the provincial governments of Punjab and Sindh from procuring wheat this year.
Statistics showed that almost 70 percent of Pakistan’s wheat is produced in Punjab, with the remaining 30 percent in Sindh. Furthermore, the provincial governments have opted to restrict the private sector from procuring wheat directly from growers this season. They have instead mandated that the provincial food departments and the federal Pakistan Agriculture Storage and Services (PASSCO) procure the grain to build buffer stocks, with millers permitted to purchase from these reserves. This buffer stock strategy aims to stabilise wheat and flour prices in wholesale and retail markets throughout the year. The Present condition, however, is exacerbating the wheat and flour price crisis, with wheat available from growers at Rs 100/kg costing Rs 125/kg in Karachi because of corruption at multiple checkposts.
Sources also identified that the Punjab food department has only managed to procure 3.5 million tons of wheat this year, a significant fall from the 4.5 million tons procured last year. Similarly, the Sindh food department has attained only half of its target, producing 700,000 tons against a set target of 1.4 million tons.
On the other hand, the Food and Agriculture Organization of the United Nations (FAO) forecast for world wheat production in 2023 has been raised slightly as against preliminary expectations in March and now stands at 786 million tons, which would be the second largest outturn on record and only 1.3 percent below the 2022 level.
In the European Union, wheat production is seen increasing moderately year-on-year because of an expansion in plantings and usually good situations at the start of spring, notwithstanding dryness in parts of Italy, Portugal and Spain.
In the Russian Federation, although dry situations in southwestern parts of the country eased, a fall in winter wheat plantings is expected to constrain production in 2023. In Ukraine, the economic impacts of the war, including low farm-gate prices, dissuaded various farmers from planting wheat. As a consequence, in addition to pockets of dryness in the southeast, a well below-average wheat harvest is forecast for 2023.
In the United States of America, with recent rains providing some relief to dry conditions in key wheat areas of the Central Plains and winter sowings up year-on-year, production is forecast to exceed the drought-reduced outturn in 2022.
In Canada, resting on expectations of an upturn in plantings, wheat production in 2023 is projected to rise year-on-year.
In Asia, despite heatwaves during March in northern India, the 2023 wheat harvest is forecast to exceed the five-year average underpinned by a near-record sown area and favorable weather until February.
In North Africa, rainfall deficits in Algeria, Tunisia and, albeit to a lesser degree, Morocco, are resulting in below-average wheat harvest expectations for 2023, following the already low outturns in 2022.