Posted by: Administrator | 15 June, 2008

International Wheat Crisis and its Effect on Pakistan

Written By: Afreen Baig

Pakistan produced RECORD wheat

In 2005-06, Pakistan produced 21,591,400 metric tons of wheat, more than all of Africa (20,304,585 metric tons) and nearly as much as all of South America (24,557,784 metric tons).

The Federal Bureau of Statistics valued Major Crops yields at Rs.504,868 million in 2005 thus registering over 55% growth since year 2000. 

Wheat crop damaged in USA and Australia

The U.S. is the largest exporter of wheat, followed by Canada, Russia, Argentina and Australia. Wheat prices soared to record highs on the Chicago Board of Trade and European markets on Wednesday as news of damage to key exporter Australia’s crop heightened concern about shrinking global stocks.

The US Department of Agriculture has projected that world wheat stocks will drop to 114.8 million tonnes by the end of the 2007/08 marketing year, a 26-year low, following poor weather earlier this year in parts of Europe and the United States. “Australia’s crop concerns will definitely add pressure on global stocks already hit by dry conditions and strong demand,” an official at a South Korean flour miller said. 

Wheat shortage in the world and food inflation

Higher grain prices are triggering food inflation in several countries, including India and Pakistan. In Croatia, inflation accelerated at a record pace in December as food prices soared, the state statistics office said today. The People’s Bank of China has raised interest rates five times this year to curb inflation and damp speculation in stocks and real estate. Australia’s consumer prices increased more than expected in the second quarter as fuel, housing and food costs surged. Cattle prices in Australia, the world’s second-biggest beef exporter, have soared about 23 percent this year. Rising bread and flour prices have sparked protests across drought-stricken Morocco, where the wheat crop dropped by 76% this year.

Public disturbances have also been reported in Yemen, Niger, and the Ivory Coast.

In Italy pasta producers have taken great pains to justify the increase by pointing to the soaring cost of wheat, which has increased by 60% over the past year. Consumer groups organized protests in Rome, Milan and Palermo. Wheat prices in Europe have been rising steadily over the past three months, driven up by growing demand particularly in developing markets such as China, coupled with a poor harvest in Australia that has led demand to far outstrip supply.

France inflation rose to highest annual level in at least 11 years; with food, fuel and energy prices rising sharply. 

PAK Government’s stance and action

President Pervez Musharraf blamed hoarders and smugglers for the problem and said that wheat flour is being smuggled to Afghanistan, Central Asia and even Russia. Pakistan faced shortage of wheat flour, prima facie due to hoarding by elements – which are minting money at the cost of the poor consumers. Last week, the authorities deployed paramilitary troops at flour mills across the country to ensure wheat supplies to the people. The Utility Stores have been selling flour at the official rate of 18 rupees ($0.30) per kg but it is sold in market around 30 rupees per kilogram. 

Shortage in Pakistan occurred due to three reasons:

1.      Some wheat smuggled out of country, as the world faces wheat shortage.

2.      Hoarding up by Mill owners and profiteers.

3.      Panic created by the Media in general Public. Due to which, public in general ran to buy extra three months quota. Naturally, excessive buying creates shortage and raises prices. I consider the panic created by the Media as much responsible! 

 Afreen Baig is an independent analyst majoring in International Relations and Economics. She can be reached at afreenbaig@gmail.com  

 Related News:

 THE NEWS reported on Sunday, April 27, 2008 from LAHORE: City Raiwind police have registered a case against an MNA of PML-N Mazhar Hayat Khan from NA-138 on the charges of wheat smuggling and thrashing officials of the Food Department late Saturday night. Raiwind City Circle DSP Oun Shah registered the case on the intervention of Capital City Police Officer Malik Iqbal, as the DSP had earlier refused to take action against the accused MNA and had remained in constant contact with the MNA when an application was lodged by Assistant Controller Food to assure him that no case would be registered against him. Saturday, a tractor-trolley loaded with bags of wheat was passing through the Raiwind Road.

Wheat crisis can be avoided by ‘electronic documentation’

9 June 2009: Pakistan can avoid a future wheat crisis by electronic documentation of crop production, Salim Ghauri, Chairman & CEO NetSol Technologies Ltd said. Pakistan is expected to have bumper wheat crop this year. Besides lacking the storage capacity for bumper crop, Pakistan also lacks the ability to assess the exact quantity of wheat to the last grain on ground due to the absence of technologies in rural sector.  Pakistan has already witnessed complexities arising out of such a situation back in 2007 when the government exported wheat on low price after wrong estimates by the authorities concerned and later imported on higher price. “Pakistan paid the price of its non-technological approach and this situation will continue unless we document our crop production electronically.”

 condron.us

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Responses

  1. It is not surprising to me that the public is being misled regarding US Aid. The well-meaning efforts of those concerned with these matters are often promised much but delivered little, much can be attributed to the images that media generate. The USA cannot be held faultless in this endeavour;it is also a generator of media images that are not very factual. My hope is that well-meaning and idealistic peoiple hold true to their values and find satisfaction in their efforts , if only for the efforts themselves. I am deeply disillusioned with the US and contemplating what to do. Sincerely,Frank Veasey


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