Problems in meeting wheat production targets


The Financial Daily

In Punjab Wheat cutting is starting in May month. According to this year weather reports wheat cutting in Punjab will start 20 April 2017 in a large scale.

The Punjab Flour Mills Association (PFMA) leadership has urged the government to open wheat export through sea route for disposing of the surplus stocks of 3.5 million tons lying in the government stores.

They also urged for increasing rebate on wheat export from present US$120 per tons to US$185 per tons. They further asked the government to immediately release Rs 15 billion stuck up with it in shape of claims of rebate on export of wheat.

Surplus stock of wheat was increasing for the last three years and flour mills were being provided wheat from old stocks instead of new crop.

These old stocks are no more meeting the standards and are unable to be grinded for producing flour.

Wheat can be stored for two years but the wheat stored under open sky does not qualify to be human food but millers are being asked to mix the substandard wheat with good one for producing different items.

30 percent of the stored wheat was turning into ashes every year because of less storage capacity. Wheat could not be exported from the stocks of year 2016.

The state-run trade bodies have been accused of failing to find exportmarkets for surplus wheat due to 'poor negotiation skills.

Trade Development Authority of Pakistan (TDAP) and Trading Corporation of Pakistan (TCP) could not rise to the occasion to meet the serious challenge despite the huge subsidy on exports.

Punjab and Sindh could export only 252,650 tonnes and 164,000 tonnes, respectively. Only 86 tonnes were shipped fetching just $29,000 in July 2016 as compared to zero exports in the same month of 2015.

The world grain glut does not appear to be subsiding, but instead, is poised to extend into a fourth year.

Despite a huge subsidy, running into billions of rupees, being offered on wheat export, there is no encouraging signal from any country to import Pakistan's commodity simply because of lower prices in the international market.

Pakistan's wheat remains uncompetitive despite subsidies and rebates.

Since prices began falling in the international market preventing exports, a large quantity of surplus wheat has been lying in the country exposed to rains and inadequate storage facilities.

Some of the commodity has reportedly been infected and may not be fit for human consumption.

If immediate measures are not taken then there are chances that the entire surplus stock may turn into waste.

According to the Pakistan Bureau of Statistics (PBS), wheat imports remained at zero in 2015-16 as compared to 686,650 tonnes of imports worth $185m in 2014-15. The trend has not changed.

Pakistan Flour Millers Association (Sindh zone) says under the current circumstances, only Khyber Pakhtunkhwa can export some wheat as its territory borders with Afghanistan.

Sindh has been unable to do so owing to low rates in the global market. Sindh Food Department's reserves of wheat stocks are 1.4 million tonnes of 2015-2016 crop plus 0.4 million tonnes of the 2014-15 crop.

The government has allowed exports of 0.9million tonnes with subsidies, costing the exchequer a huge amount of around Rs11 billion, to prevent the domestic price fall.

Exporting the commodity via sea is not possible as this would make it even more uncompetitive. It seems that the only buyer at the moment is Afghanistan.

Currently, the EU and Black Sea countries are the most competitive in price terms, having freight and logistical advantages to the major growth markets of the MiddleEast and North Africa.

Since Pakistan does not have the required storage capacity for excess stocks, domestic prices will go down when the un-exported glut is finally transferred to the local markets.

Wheat Production Projection

The country's wheat production is projected at 25.13million tonnes this year against expected consumption of 24.5 million tonnes, leaving a surplus of 0.7million tonnes. There is a leftover stock of around 0.8 million tonnes of the last two years.

Undetermined wheat procurement policy Punjab prepares for wheat harvesting next week. A sense of optimism has prevailed among farmers and policymakers alike.

Both feel that achieving the target of 19.50million tonnes should not be a problem, despite a setback in the rain-fed areas and a slight fall in acreage.

Wheat crop has largely been neutralized by the huge jump in fertilizer off-take, and weather, by and large, being favourable for the crop.

The sowing and germination processes in the barani (rain-fed) farmlands, almost form 12 percent of the total wheat area of the province, have been affected by persistent drought.

With more application of subsidized fertilizer, the average per-acre yield of wheat has increased from 29.95 to 30.54 maunds

Drought persisted right up to tillering, until the January rains brought some relief.

According to the early assessment, it may have cost a 25-30 percent loss in production. These areas contribute just over 1.5 million tonnes.

The loss of an estimated 0.5million tonnes would surely be compensated by the output recovery from irrigated areas.

This season, the province has sown wheat on 16.68 million acres, against the target of 16.80 million acres. Last year, total sowing was on 17.08 million acres.

The jump in fertilizer application may prove compelling to boosting output. In the first four months of this season (Oct-Jan), urea application went up by a high rising of 27.50 percent.

In the same way, the DAP application increased by 12.20 percent over the same period. This increase was over and above 36 percent DAP use last year.

Since the subsidy on DAP started a year earlier than urea, farmers availed it much more and reaped the benefit with a slight increase in the provincial average yield per acre from 29.95 maunds to 30.54 maunds.

Around one-third of the targeted area could be sown before November 20, which is considered an optimum time for completing wheat sowing in most parts of Punjab.

The government has set the wheat output target at 26 million tonnes for the 2016-2017 Rabi seasons.

Last year, wheat production was recorded at 25.4 million tonnes as against the target of 25.8 million tonnes. The prevailing dry weather is also likely to affect crop output.

There has been a decline in wheat acreage in the province's arid zone. The meteorological department has forecast less-than-average rains for December and January.

Surface and groundwater resources are also expected to experience further depletion due to low precipitation.

The availability of canal water is also becoming a problem.

The authorities concerned should give thorough consideration to the matter and take effective measures for correcting the situation on a war-footing basis.

El Nino Effect

There is a significant correlation of winter in the northwestern region of Pakistan with El Nino that is causing excessive precipitation in northern and northwestern parts of the country in the winter.

Based on an analysis of global meteorological data, a recent study has also suggested that El Nino may cause excessive precipitation in the MiddleEast.

The recent cold conditions in the northern parts of the country may be attributed to El Nino, but it can also manifest itself in the form of drought-like conditions in the summer.

To cope with the possibility of drought-like conditions, authorities should have a contingency plan to combat negative impacts, especially for rain-fed crops.

So, from floods to longer-than-usual dry spells and more heat waves, a variety of weather conditions is expected in the country due to presence of the enormous El Nino confronting this region, including Pakistan.

The changing weather pattern seems to be taking a toll on winter crops as there were no rains during the past two-and-half months and high temperatures are hindering timely sowing of wheat crop, the country's main staple food.

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