NOW WHEAT CRISIS STANDS FRONT!

M.R. CHAUDHRY
Jan 07 - 13, 2008

Wheat is the most important food item for the overwhelming majority of Pakistan and the world around. Flour of wheat, which is popularly used for cooking bread or naan through-out Pakistan, is presently selling at as high a rate as Rs.19 per kg at Karachi but in some areas atta is not even available to satisfy the demand. Almost similar situation prevails in other cities of Pakistan like Islamabad, Rawalpindi and Lahore. According to the most recent news, grain stocks worth Rs100 million in Karachi have been looted following the assassination and martyrdom of Mohtarma Benazair Bhutto, despite the deployment of law enforcing agencies. As a consequence wheat flour is now being sold in the range of Rs.30 to Rs.32 per kg in Karachi.

Last year the Government's estimate was that wheat production in Pakistan would be at 23.5 million tons and thereafter they revised the figure to 23.3 million tons. The speculators assessed it over 24 million tons to exploit the situation in order to grind their own axe. The Government, without assessing all the pros and cons made an unwise and hasty decision to export 1.5 million tons of wheat as the Government agencies were of the considered opinion that there would be no wheat or atta shortage in the country till the next wheat crop is harvested, in view of the bumper wheat crop last year in addition to the stock carried forward from the last year's stock, even after this export.

Now the position has reached this stage that exports of wheat and flour to Afghanistan, Iran and Central Asian States in large quantities and unabated smuggling, has lead to shortage of the commodity in the country. It was commonly observed and noted that 1200 to 1300 tons of flour was exported to Afghanistan every day but recently it went up to about 2000 tons of wheat per day. This information has been provided by Raja Shahid Hussain, Additional Secretary, MINFAL. Although this was the official data in respect of regular exports, as far as smuggling and irregular transportation of wheat and flour is concerned that cannot be correctly accounted for. People accuse the authorities of giving a free hand to the profiteers and smugglers. It is also sadly observed by the people that the authorities have given a free hand to them. No action is being taken against hoarders, who are artificially raising the prices of flour.

The demand for flour in Afghanistan has jumped up. Although the Government has imposed a duty of 35 percent for the export of the commodity, the imposition of the duty has had not proven effective to control wheat and flour export to Afghanistan due to the much higher rates as well as higher prices of food items prevailing there. It would be relevant to point that the Government is importing wheat at the rate of $500 per ton while the price of wheat in the country was $200 per ton only.

Thus it was a great temptation for the smugglers and private traders to send wheat through illegal ways to the neighboring countries including Afghanistan. In view of the higher demand in Afghanistan, the private sector had announced to export one million tons of flour to Afghanistan this year. This sector has reportedly already exported 0.6 million tons before the ban was imposed. According to a media report, the wheat smuggling is likely to surpass 2.1 million tons during this year. Chairman of Pakistan Flour Mills Association, Sindh Circle, Ch. Anser Javzed said that although about 700,000 tons wheat flour was smuggled every year to Afghanistan, Central Asian States and Iran via Chaman border, the situation this year could be worse as this figure was expected to reach 2.1 million tons. He also disclosed that the wheat is being smuggled into Afghanistan at half of its import rate. He feared that if smuggling was not checked, the price of the commodity in the local market would go on rising phenomenally.

Javed was astonished that on one hand wheat was being imported at $500 per ton to cater to the local demand, on the other it is being smuggled at half of the aforesaid international rate. The Chairman of Flour Mills Association was of the considered opinion that (to check smuggling of wheat and wheat flour) the government should allow the import of wheat for export to Afghanistan. He demanded of the government to rein in the wheat smuggling if it is interested to overcome the crisis.

The Government provides subsidy on wheat to flour mills for selling the commodity on reasonably low rates in local markets. However, it is deplorable that the mill owners, on the other hand, instead of selling flour in the local markets, sell it at black market rates to make high profits unethically and immorally.

At the time of wheat harvest last season when the Government decided to export one million tons of wheat, the scribe had pointed out in the columns of Pakistan and Gulf Economist with cogent reasons and relevant data that it would be "penny wise pound foolish" if the Government had later to import wheat to meet the country's requirements at the international market rates. Of course, that was a correct assessment and foresight prima face the presently prevailing situation when the Government is compelled to import wheat at $500 per ton, more than double the price that the Government paid to our farmers while procuring wheat from them.

According to an official estimate around 0.8 million to 1 million tons of wheat stocks are kept by the hoarders at the moment. Besides, according to an official MINFAL, the Government including the provinces and PASCO/Food Department have stocks up to 4.8 million tons piled up in their warehouses. If that is the position, why does the Government not come forward to rescue the common man from this crisis?

However, the Government seems helpless to control the situation, which has rendered the lives of common people so miserable. This has become more irksome and troublesome because of large scale unemployment and price hike. The middle and lower middle classes are badly clamoring under pressure as compared to the well-to-do and affluent class. Hoarding, black-marketing, unethical and illegal practices are going on unchecked in connivance with the authorities concerned. Big businessmen, middlemen and retailers have formed a mafia and are exploiting the situation for extorting money. They create artificial shortage of wheat and flour with an intention to mint money. It is a sorrowful state of affairs that no action is being taken against hoarders, black-marketers and profiteers who feel scot-free to play hell with the helpless people, especially the daily wage earners, who are in hundred thousands in this country and who are in great distress because of the high prices of atta and wheat. To overcome wheat crisis and discourage hoarding in the country, Trading Corporation of Pakistan (TCP) has accepted bids for import of 800,000 tons of wheat. The Government has approved the import of one million tons of wheat. About 30,000 tons of wheat had already been landed at Karachi port on 29th November, 2007. During the month of December 365,000 tons of additional quantity of wheat is expected to reach Karachi port. An official of MINFAL added that the remaining wheat would arrive in January and February, 2008.

Following the protestations and clamoring of the people, the Supreme Court intervened. It directed the Government to launch crackdowns on hoarders to uncover the stocks for sale in the open markets.

The raids on some wheat storages resulted in uncovering 35,000 tons of wheat. The Government claims that wheat flour is available at their Utility Stores. Firstly these stores are limited in number. Secondly, their stocks get exhausted very soon. Moreover, common customer is required to buy many other items to purchase a sack of 10 to 20 kg atta. There are complaints that the Utility Stores sell atta from back doors at black rates to make personal gains.

Regarding the origin of wheat crisis there was a bitter controversy between the Federal and the Provincial Government of Punjab. The Federal Minister Humayun Akhtar accused the Punjab Government of not locating and laying hands on the large scale hoardings and giving a free hand to their favorites to prosper. The Provincial Government, in return, accused the Federal Government of showing more interest in exporting wheat and wheat flour and permitting smuggling of the commodity to India, Afghanistan and Central Asia, which have caused wheat crisis.

It has been reported that as the Government has not yet declared the support price of wheat and the sugar mills did not start crushing in time, farmers have grown wheat on an area 20 percent less than the previous year. Similarly, Punjab Irrigation Department anticipated 20-25 percent water shortage during Rabi 2007-08. In the backdrop of anticipated water shortage and late crushing by sugar mills, wheat production target of 24 million tons is bound to suffer and at the same time farmers are likely to suffer a setback in their income from this crop. Because of the flawed policies of the Government, common citizens of Pakistan, farmers' community and country's economy are all apt to suffer.

As a futurist approach, the Government must make such policies and take such decisions, which may not be lopsided and unwise. Moreover, these decisions should be taken well in time so that farmers and other stake holders may lose no time to achieve rather exceed the targets. The Government must think hundred times before exporting staple food item like wheat so that the same is not required to be imported at more than double the rate as is being done this year in the case of wheat to meet the requirement of our own people. Naturally and logically, hoarders, black-marketers, profiteers and smugglers deserve no sympathy. They must be dealt with, with iron hand. It would not be amiss to mention that even sugar mills owners, whose kith and kin are sitting in the assemblies, equally deserve no leniency as regards the crushing schedule, already embodied in the act. Inordinate delay in crushing by sugar mills upsets farmers' schedule for cultivation of wheat and other crops, which ultimately affect the production. They also need to be bound to pay the price of sugarcane supplied by the growers, enabling the latter to arrange for the inputs of next crop. The Government, instead of using lip service, must act promptly and responsively.

Chairman Agri-Forum, Muhammad Ibrahim rightly stressed that while India is constructing new dams even at the controversial sites, we are sleeping over the subject. According to him it is like committing suicide at the national level. Urea, DAP, nitrophos, potash and other fertilizers should be made available to our farmers at subsidized rates. India provides electricity for agriculture purpose almost free of cost. In Pakistan farmers are heavily billed what to speak of any relief in electricity bills for running tube wells. Load shedding and power shut-downs have badly affected agriculture. There are also many other problems,( including supply of improved and certified seed, easy and speedy and adequate credit and extension service to equip our farmers with the modern technologies to increase their per acre yield at par with other countries) which cannot be enumerated in this limited space, all of which deserve immediate attention of the concerned authorities, ministries and departments for resolution in order to get better production for providing food sufficiency to the people, respite to the farmers, for poverty alleviation in rural areas and for boosting the country's economy. Briefly, taking cognizance of the situation the present wheat crisis warrants that the Government should seal its borders to stop even a single grain of wheat to be smuggled, conduct raids within the country, uncover the hidden stocks and bring them to the open markets to relieve the common man and take the black-marketers, hoarders and profiteers to task. This needs an honest administration and good governance It is the duty of the Government to make proper arrangements to supply wheat and flour to the general public, using their reserved stocks and importing wheat as much as necessary to save the poor people from dying of hunger and shortage of food till the next crop of wheat is brought to the open markets.