The government’s plan to improve the economy is set to falter after it decided to import three million metric tonnes of wheat as a stop-gap measure against shortages. The decision to buy the wheat on cash payments will certainly dent the dwindling foreign reserves and further widen the trade deficit.
The ECC has approved importing two million tonnes of wheat on G2G basis and another one million tonnes by the international tendering process. Pakistan will be buying some of the most expensive wheat. The Trading Corporation of Pakistan (TCP) has been issued the lowest price of $515.49 per tonne – almost 45 percent higher than rates in October 2021.
It has been learned that the government will buy wheat from Russia on cash due to the sanctions on Moscow after the invasion of Ukraine. Both Russia and Ukraine account for 30 percent of global wheat production. There are no restrictions on importing grains from Russia but the government would have to work out a mechanism to make payments due to banking sector sanctions.
Pakistan is grappling with lower-than-expected levels of food output. The country is in urgent need to import key food items including edible oil, wheat, sugar, tea and pulses. Wheat production stands at 26.3 million tonnes and there is a shortfall of five million tons to meet the domestic requirements and build strategic reserves.
Successive government have failed to increase production of essential crops. The wheat shortfall is due to climate change, warmer weather, water shortages and rising prices of fertilizer. Even urea is in short supply and needs to be imported. The concerns of wheat shortages were raised as early as February but no decision was taken and the nation will have to pay the price.
Pakistan remains an import-reliant country, especially for food items. The government recently imposed a ban on importing ‘luxury items’ but the decision is not making a significant impact. We need to reduce our dependence on food imports. Even the local industry even imports raw materials for their products. The government needs to work on a long-term strategic plan to increase output of food items so we are less dependent on imports and can improve our economy.
