It is good to represent our country, Pakistan, in different forums by stating that the “Agriculture sector” is the backbone of our economy. But do we significantly prove it? The current wheat crisis in the country has shattered this belief, leaving many farmers in misery and daunting situations. Wheat harvesting is underway, and wheat production for 2023-24 is estimated at 29.69 million tons, setting a record high relative to last year, according to provincial governments’ reports shared during the Federal Committee on Agriculture (FCA) meeting. This indicates that farmers have played their best role in meeting the growing demands of people in the country by sowing wheat crops with their best efforts and hard work. But still, they are worried. Why?
The government of Pakistan often intervenes in the wheat market since wheat is an essential staple. It obtains 70% of the marketable surplus at the Minimum Support Price (MSP). The minimum price (MSP) set by the government for specific agricultural goods is what happens if the open market prices are lower than the costs incurred. Resultantly, the wheat is bought then at this price to safeguard the farmers. However, wheat growers are not even getting the Minimum Set Price (MSP) for selling their wheat as set by the government, which is Rs. 3900 per 40kg bag. Interestingly, the Government of Pakistan is also not willing to buy from them at this designated price.
Where did the problem originate? The story here is multifaceted. First and foremost, last September, a big mistake happened when the caretaker government imported around 3.5 million tons of wheat—not by any state authorities of Pakistan, i.e., PASSCO (Pakistan Storage Services Corporation), not by the government, not even by the Ministry of Commerce. Instead, the government allowed private parties to import wheat from exporting countries like Russia, Ukraine, and Bulgaria, etc. Due to this, there is a huge wheat stock already held by PASSCO, around more than 4 million tons. It is obvious that the government wants this already held wheat stock to be sold first to replenish with newly harvested wheat stock for this year in its strategic reserve, thus, delaying the wheat buying from the government at this stage. Secondly, the already imported wheat held by the private sector, they are selling it at a lower rate—around Rs. 3200 to Rs. 3400 per 40kg wheat bag, less than the market selling price set by the Government, which is Rs. 3900. Consumers, on one hand, are benefiting from this reduced price as they are getting wheat flour at cheap rates for their consumption, while farmers, on the other hand, are facing losses.
Farmers are not ready to sell wheat, which has already been harvested almost 50%, at the current prevailing price, insisting the government to fulfill their promise of buying at the minimum price set at Rs. 3900. Additionally, it is true that inputs for wheat production, i.e., fertilizer rates, water bills, electricity bills, gas bills, have all increased for farmers in the current surge of inflation. Due to the increased cost of production, their profits will shrink. If such conditions persist, it will become difficult for them to feed their families. Thirdly, the federal government is not ready to buy wheat from farmers at this point in time because they already have wheat stock, while the Punjab government cannot buy wheat from farmers due to a lack of funds. Moreover, the Punjab caretaker government already imported wheat last year on debt for almost Rs. 350 billion, which is still unpaid. On the other hand, the Federal Government is not allowing the Punjab government to take on more debt for purchasing wheat from farmers in recent times as the country is under restrictions from the IMF for loan payments.
Last but not least, the government has recently said in a meeting with the Farmers Association that the wheat being sold has more than 10% moisture, i.e., around 18%, so it will be purchased when it gets dry! This must not be a big deal for the government; rather, these are mere excuses that the government is making. With almost 4 million tons of wheat stock with the government and another wheat production of around 29-30 million tons this year, it will suffice the wheat consumption capacity of approximately 30 million tons, and the rest can be exported, or as we know from previous year trends, some may also be smuggled.
If the government gets ready to take the initiative to buy wheat from farmers, then the wheat needs of end-users will be fulfilled, and farmers will also be happy this way. But it is being observed that the government is not willing to allocate funds to purchase wheat from farmers and, most importantly, not ready to sacrifice their so-called interests or benefits, thus, leaving the farmers at mercy and worried. It will not be inappropriate to say that unfortunately, our farmers, even after 75 years of independence, are still under the vicious circle of poverty but work hard day and night for others’ people’s survival. Due to the burgeoning complexity of the situation, farmers have been facing huge problems. They still keep those huge wheat stocks with them as more than 50% of the crop has already been harvested so far. They also fear their stock may get spoiled due to moisture currently due to the rainy season and maybe in the future, and they also don’t have the storage capacity to store the wheat.
Additionally, they are insisting the government purchase wheat from them at the promised rate, but all in vain. The Farmers Association has put forth the current situation before the prime minister to solve the issue, but still, that matter has not been resolved. With no buying intentions at the specified Rs. 3900 price, the government has just left this to the open market, hence, forcing the farmers to sell their wheat at much lower prices. Farmers are worried enough as they have no option but to sell their wheat stock at much lower rates with the fear before the whole wheat crop gets spoiled. Such a situation has led farmers to a much-deprived position from society, adversely affected their social and economic well-being. The regionally controlled minimum guaranteed support price provides an incentive for farmers to plant wheat each season, but as to what is happening to farmers, do you think farmers will put their utmost efforts to plant wheat next season? Will wheat production grow? What about survival?
It is important to remember that other nations have transformed from major wheat importers to major exporters with effective interventions and strong leadership. Of these, Russia’s transformation is the most striking example, once the most deficit wheat country till its mid-80’s but now a huge wheat exporter ahead of the US and the European Union. According to estimations from the Pakistan Agricultural Research Council (PARC), an average citizen’s daily diet comprises 60% of wheat, which is consumed annually at a rate of 125 kg per person. It demonstrates how the majority of us are dependent on wheat, and such type of crisis, if not controlled in the short run, may put us in a difficult situation in the long run that will ultimately cause political unrest and a significant depletion of our foreign reserves and also will be a huge setback for Pakistan’s economy
