May 3, 2010

Pakistan's wheat production lower than estimates

Pakistan's wheat production will be at least 10-15% lower than earlier estimates if compared with last year output due to early onset of summer this year and water shortage, according to recent forecast by official sources. 

Farmers' representatives though estimated even lower wheat productivity, predicting 15-20 % dent in production.

It is a consensus that wheat production is at least 10% less than last year crop and may range between 22 million tonnes to 22.5 million tonnes against earlier estimates of 24 million tonnes. Reduction in per acre yield is attributed to early maturity of grain, reducing its size significantly in many parts of the country.

Due to high temperatures, arrival of wheat in market has also been accelerated and it is officially acknowledged that 90% of wheat in Punjab has already been harvested while 75% has been undergoing the process of thrashing.

Out of an estimated eight million tonnes marketable surplus wheat in Punjab, private buyers have so far bought about 1.5 million tonnes wheat, flour mills purchased 1.4 million tonnes, Punjab Food Department procured 1.5 million tonnes and Pakistan Agricultural Storage and Services Corporation Ltd (Passco) has been able to buy 3.5 lakh tonnes. Hence, it is projected that about five million tonnes of wheat has already arrived in the market.

Punjab Food Department aggressively issued gunny bags to farmers in the first 15 days of operation, which equals to about 2.2 million tonnes. This approach led to stabilised price of wheat to PKR850 (US$10.1) per 40 kg to PKR900 (US$10.7) in many districts of the province. In the given circumstances, which entail financial and other constraints, the Food Department has been able to stabilise wheat market to some extent.

However, the department, as planned, is in process of adopting go slow policy in next 15 days, from May 1 to May 15 as far as distribution of gunny bags is concerned. The Food Department, which issued about 60% gunny bags to farmers in first phase of procurement drive, will distribute 25% gunny bags in next 15 days and remaining 15% in the last fortnight of May. Market insiders feared that wheat price may fall below PKR850 (US$10.1) per 40 kg in coming days mainly due to expected slow buying by public sector departments. Pakistan Agricultural Storage and Services Corporation that entered late in the market should have accelerated buying in order to support official price of the commodity. Likewise, Punjab Food Department will have to expedite wheat procurement process in order to continue momentum of wheat operation.