Pakistan's wheat production forecast to increase

by World Grain Staff
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WASHINGTON, D.C., U.S. — Pakistan’s soon-to-be harvested 2016-17 wheat crop is forecast at 25.3 million tonnes, marginally higher from last year’s revised production, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in an April 4 report. Pakistan’s government has established a procurement target of 6.95 million tonnes, which is expected to raise government-held stocks to around 11 million tonnes at the completion of the procurement season in a few months. Wheat trade estimates are largely unchanged from year to year and Afghanistan remains Pakistan’s sole export market, taking 600,000 tonnes of wheat (in the form of flour).

Pakistan’s wheat milling industry is privately owned. There are about 1,000 flour mills in Pakistan, which meet the consumption needs of about 40% of the population, with the balance met by on-farm consumption. The disbursement of government-owned wheat to flour mills is managed in an effort to ensure that sufficient wheat is available throughout the year. In urban areas and among affluent consumers, consumer preference is shifting from higher whole grain to lower extraction flour and traditional flat bread to western-style, loaf bread. Traditional home-ground flour is also losing favor to commercially milled flour. Specialized products like cereals suited to the changing life styles in the urban areas are also gaining demand.

Pakistan maintains a largely government controlled wheat marketing system and the government considers wheat as the key strategic commodity. The federal government sets a minimum guaranteed support price or procurement price and an issue price for wheat sold to flour mills. Through provincial food departments, Pakistan’s government procures wheat from farmers at the support price and then releases wheat to the flour mills at the government fixed issue price. The issue price is set at a rate that captures much of the cost of buying and storing the wheat, but there are implicit costs that are not fully captured. Wheat prices and the movement of wheat are controlled at the provincial and district levels. Grain stocks are procured and maintained by the provinces.
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