Flour crisis in Pakistan | BY Dr Sahibzada M Usman


Flour crisis in Pakistan

IN Pakistan, the cost of wheat flour has been steadily rising for many weeks. People have been heavily hit by the sharp increase in the price of wheat since roti and naan are among the country’s staple cuisines.

Long lines form to get government-subsidized flour; on January 7, a 35-year-old man was killed in a stampede at one such distribution location in Mirpur Khas, Sindh.

Meanwhile, there have been demonstrations over the high prices in Khyber Pakhtunkhwa. The federal and provincial administrations have placed the blame on one another.

The situation results from long-standing problems that have been made worse by the Russia-Ukraine conflict, the devastation of the 2022 floods and the smuggling of wheat to Afghanistan.

The two provinces that produce wheat, Punjab and Sindh, have seen flour prices range from around PKR 145 to PKR 160 per kg, while KP and Balochistan have seen higher costs.

A Gulf News report claims that cost of 5 kg and 10 kg flour sacks has almost quadrupled in Pakistan since last year.

Pakistan has to import wheat to meet its needs, and most of it comes from Russia and Ukraine.

For instance, according to statistics from the Observatory of Economic Complexity (OEC), Pakistan imported $1.01 billion worth of wheat in 2020, the majority of which came from Ukraine ($496 million), followed by Russia ($394 million).

While last year’s floods reduced the domestic crop, this year’s Russia-Ukrainewar damaged the supply.

However, the issue in Pakistan is more with distribution than with insufficient supplies. The provincial governments in Pakistan give wheat to the mills. The retail marketplaces get the flour from the mills after that.

Provinces that foresee a wheat shortage, may seek more supplies from the federal Pakistan Agricultural Storage and Services Corporation (Passco) warehouses.

Particularly in rural regions, the smaller chakkis (flour grinders) purchase straight from the farmers.

Punjab and Sindh are the two main wheat-producing provinces. Punjab provides 77% of Pakistan’s wheat production, followed by Sindh 15%, Khyber Pakhtunkhwa 5%, and Baluchistan 3.5%, according to the US Department of Agriculture.

The border between Afghanistan and Khyber Pakhtunkhwa is quite porous, and much wheat is smuggled through it to sell for high prices in the neighboring nation.

Floods in Sindh caused significant damage to its Kharif crop.

According to a story in The Express Tribune, the Pakistani Planning Commission estimates that the floods caused the agricultural industry and its sub-sectors Rs.800 billion ($3.725 billion) damage.

Some, including the federal government, have said that Punjab and Sindh delayed releasing wheat to mills, which is why there was a scarcity of flour.

Others assert that since many powerful politicians come from rural, agricultural backgrounds, the government did little to stop mill owners from hoarding inventories, driving up costs.

Locals also assert that there is not enough wheat available for retail shops and other subsidized sale places because mill owners are selling it at exorbitant rates to those who are ready to pay.

The Pakistani government has declared that 2.6 million metric tons of wheat will be imported this year.Since the first 1.3 million metric tons of this have arrived, the price will be expected to decline. But this import cost is hard on a country with dangerously low foreign reserves.

According to a Reuters story earlier this month, Pakistan’s central bank’s foreign reserves have plummeted to around $5 billion, barely covering three months’ worth of imports.

The yield of wheat per acre in Pakistan is not very high. This is due to a number of factors. Agriculture has not benefited from technical developments, the creation of high-yielding breeds, and no land reforms.

Canals are drying out as the water table is falling. Power costs are high, diesel is highly expensive and the supply is inconsistent.

The farmer receives no compensation. In addition to urea, additional fertilizers are imported, which drives up the cost of fertilizer.

According to a 2022 World Bank study on Pakistan’s agriculture, the country’s agricultural growth declined from an average of over 4% per year between 1970-2000 to around 3% afterward, despite significant state expenditure and assistance from development partners.

Unlike wheat, rice is one of Pakistan’s main exports. Due to the lack of flour this year, there has been an increase in domestic rice demand.

Floods impacted the whole rice harvest this year, particularly in southern Punjab, eastern Balochistan and regions of Sindh near the Indus River.

On top of that, there was a wheat scarcity, which boosted demand for broken Basmati rice significantly and raised costs.

—The writer is Assistant Professor at Air University Islamabad.