ISLAMABAD:Reducing the Government’s footprint in wheat and other crop markets to encourage a market-based allocation of
resources in the sector will help productivity growth in agriculture.
Also, a reduced government footprint in wheat markets will induce more farmers to diversify into other crops
that are becoming increasingly relevant in the consumption basket of Pakistani households, a World Bank Report titled “From swimming in sand to high and sustainable growth in Pakistan” said.
The report recommended the Government of Pakistan to maintain a security stock comprising a fraction of national consumption, as it is done in other countries in the region, such as Bangladesh.
It added that food security was a valid policy priority that does not require the current procurement system that is in place for wheat.
In addition to the security stock, a strategic reserves management system should be in place, and equipped with modern bulk storage infrastructure, early warning systems, market information, a food security fund and policy lexibility to ensure trade policies facilitate the smoothing of reserves in case of need through importing or exporting.
Provincial agriculture departments could support alternatives for wheat planting areas that show very low
productivity, to support farmers in moving into alternative crops, such as oilseeds, pulses and fodder, or fruits
and vegetables when closer to markets.
In Sindh, for example, the share of household expenditure on high value food products is increasing, while there has been a decrease in the consumption of cereals and other crops (including sugar) over the past two decades.
However, the agri-food system has not responded to these changing consumption patterns and the demand for pulses, rapeseed, mustard and other water-thrifty, high-value crops are being supplied through imports, despite the suitability of local agro-climatic conditions, and the shorter durations and lower water requirements.
Pakistan is spending US$3.0–3.5 billion on importing oil seeds and US$ 0.7 billion on importing pulses every year. Pakistan is paying the opportunity cost of forgone economic productivity and water conservation, and paying it in scarce foreign exchange.
The report also suggested to gradually reduce the government footprint in the sugar and wheat sub-sectors, increase competition in the sugar sub-sector, removing import protection, export subsidies, minimum prices, and licensing restrictions for new millers.
It added that licensing requirements for millers lead to an oligopsony, reducing consumers’ and farmers’ welfare. More fundamentally, interventions introduce distortions to the efficient allocation of land and equipment, which could be deployed for higher-productivity crops, and thus rationalize water use and contribute to climate resilience.