EVERY government faces a challenge in selecting an optimum policy to provide food supply to consumers at a reasonable rate and maintaining a nutritional standard.
Though the best solution, in the long run, would be to increase production through technological advancement, at the same time alternatives available for the short run are an interruption-free market, imports, input subsidies and price support.
In Pakistan the objectives of wheat marketing policies are: To achieve food security, provide wheat at a low price to consumers, assure reasonable price to growers, and boost production.
The policies adopted to achieve these objectives were to assure minimum price to growers through floor price mechanism and provide fertilisers and subsidised irrigation to growers.
Wheat production in our country can be divided into three distinct periods: The pre-green revolution period, before the release of high-yielding verities (1948-66). The green revolution period, when modern inputs such as high-yielding varieties, fertilisers, and irrigation were rapidly used (1967-76) and the post-green revolution period when additional gains of modern inputs slowed down considerably.
The average growth rate of wheat per annum during the pre-green revolution, green revolution and post-green revolution periods were 1.50 per cent, 5.1 per cent and 3.3 per cent respectively. During 1948-1966 increase in wheat production was achieved through increase in cultivation area. The trend was reversed between 1967 and 1976 when technological changes played a major role in enhancing wheat production. Since 1977, however, the rate of yield growth has slowed down.
There are two distinct periods with regard to the government’s intervention and adoption of policies to ensure wheat supply in the country. In the first period until 1971, the prices were kept higher than in the international market at wholesale level. After that, during 1970s and 1980s there seem two objectives of the government’s food policies.
1. To keep domestic wheat prices lower for the urban and landless rural poor.
2. To discourage private sector involvement in wheat services sector, such as wheat storage, transportation and distribution.
Fixing wheat flour prices by the government and involving itself in wheat marketing is a mechanism to provide reasonable farm gate prices to farmers. The guaranteed minimum price fixed and announced during growing season, and procurement price variables depend upon market condition.
It is interesting that guaranteed minimum price (GMP) has mostly been lower than market price. To discourage the private sector involvement in wheat marketing, a narrow margin between farm gate and release price to flour mills was maintained. Furthermore, no difference in release price in different regions and different time was kept. The ultimate result was interdiction of private sector to bid prices up to equilibrium level, which created an inefficient marketing system.
Below equilibrium prices of wheat and wheat flour naturally create a gap between supply and demand, force the government to import around million tons of wheat per year to fill the gap. To keep domestic price lower than import parity price by subsidising the latter equal to difference in international and domestic prices has become a common practice.
Agriculture in our country has been subjected to high degree government influence and intervention since long. Because of the importance of wheat, there has been wrong government involvement in the wheat sector since the late 1950s. Inter-provincial and inter-district ban has become an annual routine in order to facilitate government procurement of wheat from surpluses up to 2004-2005.
A combination of sector specific trade and micro economic policies in our country are said to be used as an effort to maintain low consumers prices, to achieve price stability for farmers and to support the agricultural processing industries. As a matter of fact wheat prices in the country have always remained low relative to import prices. Therefore, foreign producers and flour millers’ rather than consumers receive much of cheap wheat. The flour millers have always enjoyed quotas of purchase of government-subsidised wheat below market price and then have been able to sell the flour at market prices. In order to promote wheat marketing efficiency, it is important that import and sales should be planned and announced in advance.
The APCOM recommends fixation of support price for wheat, each year before planting season. The reason behind it is to increase production and protect farmers from cost increased. But due to mismanagement, the desired results could not be achieved, and the country faced the crises, thus compelling imports. It was an important breakthrough in 2000 when Pakistan entered into export market and became a potential competitor of India in the Gulf and the Middle East markets. Again the crises have emerged in the country.
What is needed to be understood by our policy-maker is that prolongation of non- farmer-friendly policies neither help our farming sector nor create inter-provincial harmony or work for the well-being of the common man. Despite having a strong agricultural background, Pakistan has not been able to attain self-sufficiency in wheat because of the failure of agricultural policies. The government has neither achieved food security nor has the common man been spared from paying high prices.
To overcome such problems, the government should begin “farmers’ support education programme” about mechanical reaper, binders and improve the storage facilities that can help in reducing the pre- and post-harvest losses and also reduce the cost of production.
There is a need on the part of the government to make such policies that encourage production at low cost.
Keeping in view the increasing consumption of food grains, there is a need to bring the huge acreage of wasteland under cultivation. The government should launch farmer-friendly policies and cut official levies on seed, fertilisers and weedicides to facilitate the farming community compete in the international market.