December 27, 2007

Pakistan tries vainly to ensure wheat supply

A continuing shortage of wheat and wheat flour, coupled with rising food inflation, have created an unenviable situation in the run-up to Pakistan's general elections scheduled for January 8, 2008.

The Government of Pakistan has taken various measures over the past several months to ensure a steady supply of flour at affordable prices -- with limited success. These steps include contracts to import nearly 1 million tonnes of flour and imposing a 35 percent export duty on wheat and wheat products, according to a US Department of Agriculture attache report posted on Tuesday (December 25, 2007) on the Foreign Agricultural Services Web site.

A continuing shortage of wheat and wheat flour, coupled with rising food inflation, have created an unenviable situation in the run-up to Pakistan's general elections scheduled for January 8, 2008. The wheat crisis which began last spring has become an election issue, with the Government of Pakistan (GOP) taking various measures to ensure a steady supply of flour at affordable prices -- with limited success.

The GOP continues to maintain that Pakistan harvested a record 2007 wheat crop of 23.5 million tonnes (MMT). Analysts argue that the actual crop size was one MMT lower than the GOP's estimate.

In April 2007, the GOP lifted the ban on wheat exports, shipping out approximately 500,000 MT of wheat. In quick reaction, wheat prices began to rise, resulting in the GOP once again imposing a wheat export ban in May. Since then, domestic wheat and wheat flour prices have steadily climbed. Availability of flour for domestic consumption at retail markets has become sporadic. Speculative hoarding and smuggling to neighboring countries have also contributed in aggravating the domestic wheat supply situation.