Country Focus: Pakistan

by Intern Intern1
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Pakistan's 4 million farms slowly are making a transition from subsistence agriculture to a more commercial focus.

Agricultural policy. Although the government gradually is reducing its involvement in agriculture, it retains the goal of greater productivity to reduce the costs of food imports. Various incentives to enhance productivity include funding for agricultural research and extension, production credit concessions and assuring fertilizer and certified seed supplies.

The government also maintains price support and subsidy programs for staple wheat. The system includes holding wheat supplies in a government reserve, which has a target quantity of 1 million tonnes.

Because most of the wheat produced in Pakistan is kept by the rural population and never enters the market, reserve stocks are used for distribution to urban centers. Reserve supplies also help to keep down the price of atta (ground wheat flour).

The government announces a procurement price paid to farmers for wheat and an issue or release price, at which wheat is sold to private flour millers from government stocks. The level of the wheat support price is very sensitive for farmers, millers and low income consumers, and any increase must be weighed in relation to the issue price.

Farmers can and do sell in the open market at prices higher than the government procurement price, and millers may buy wheat on the open market. The government actively procures domestic wheat at harvest, but must compete with private merchants.

The procurement process involves provincial food departments and the Pakistan Agricultural Storage and Services Corporation to buy at the farm level in surplus areas. If government procurements are less than required to maintain the reserve, the government imports wheat.

In recent years, the volume of wheat and flour smuggled out of Pakistan to Afghanistan and neighboring countries has increased; some estimates put the amount in 1995-96 at 700,000 tonnes. Demand for Pakistani wheat and flour has continued to grow because of higher, non-subsidized prices in those countries.

Some provinces near the border have drawn supplies from Punjab province, the primary production area, and from government stocks to meet this illegal trade, and the government has banned the movement of wheat and flour between provinces to check the smuggling. The government also has tightened security at Pakistan's borders.

Flour milling. Pakistan has about 380 mills, with an average daily capacity of 100 tonnes. Only about 40 mills are larger, with capacity of 240 tonnes.

About half of the country's mills are in Punjab province. Urban areas have fairly modern rollermills capable of producing various by-products as well as flour, while rural areas have small, traditional wheat grinding mills.

Nationally, the milling industry suffers from overcapacity, but new units are still being built. Flour mills generally operate eight to 12 hours a day; in some cases, operations are restricted by raw material shortages, but electricity rationing accounts for most of the limitation.

Domestic grain is not graded, with no common standards. Wheat from government stocks is sold on quantity only, but open market traders generally sell on the basis of samples. Flour millers do not pay premiums for milling quality characteristics.

Pakistan is a bread eating culture, and chapati, the traditional flat bread made from ground wheat (atta) rather than from extracted wheat flour, remains the most common wheat-based food. About 85% of all flour produced is atta, with bread flour accounting for only 5% to 6% of production and biscuit flour accounting for about 5%. The establishment of fast food outlets and improvement in living standards slowly is fostering an increase in the consumption of different breads and other baked products. Flour prices are not controlled, although the government encourages mills to keep atta prices as low as possible.

Wheat also has become increasingly important as a food grain in the northern and high altitude areas, where coarse grains traditionally have been consumed. This shift has occurred because government subsidies have made wheat the cheapest food grain.

Trade. Private sector wheat imports are exempted from sales and education taxes, import license fees and duties.

Port and transport facilities currently are considered adequate to handle imported wheat, but serious bottlenecks in berthing, unloading and bagging eventually are expected unless improvements are made. Available storage facilities can handle bagged grains, but port handling facilities are not well equipped to handle bulk quantities. As a result, a large pile of imported wheat normally lies in the open at the port.

This leads to additional moisture in the wheat and causes problems for millers. However, funding for bulk handling facilities for imported wheat is pending and is caught between federal and provincial bureaucracies.

Several wheat berths at Port Qasim have been privatized to a container company. The remaining wheat berths cannot accommodate Panamax vessels, or they lack sufficient space to handle the necessary bagging equipment.

Unloading still can be accomplished, but extremely efficient management will be necessary to avoid costly delays. The Ministry of Food and Agriculture and port officials have met to discuss the problem, but long term solutions remain uncertain.

Data

Production

Consumption

Exports

Imports

(1,000 tonnes)

Wheat

17,000

18,900

0

1,900

Rice*

3,800

2,500

1,400

0

Coarse grains

1,860

1,860

0

0

1995-96 marketing year unless otherwise noted

*all figures are milled basis.

Source: U.S. Department of Agriculture

 

 

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