High input cost, floods dampen FY23 wheat outlook

Our Correspondent
October 06, 2022

LAHORE: Factors including the high cost of inputs, shortage of farm nutrients, water scarcity, and damages due to record floods have emerged as the biggest challenges hindering wheat cultivation...

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LAHORE: Factors including the high cost of inputs, shortage of farm nutrients, water scarcity, and damages due to record floods have emerged as the biggest challenges hindering wheat cultivation during 2022-23 season, starting from October 01.

Hence, according to initial assessments, national wheat production in the Rabi season is projected to hover around last year's level. Some experts even fear the output may fall short by 0.5 or 1 million tonnes over last year’s. As per the latest Global Information and Early Warning System on Food and Agriculture (GIEWS), which was prepared by the Food and Agriculture Organisation of the United Nations, with many areas still flooded, planting operations for the 2022/23 wheat crop are expected to be severely hampered.

In addition, floods resulted in the loss or damage to agricultural inputs, including seed stocks, fertilisers, machinery at the household level and irrigation infrastructure, which may result in a contraction in the area planted and have a negative impact on crop development, the report suggested. However, there is no estimate of the quantum of wheat production in the upcoming season.

The planting of the “Rabi” wheat crop, almost entirely irrigated, normally takes place between October and December in the country.

According to the United States Department of Agriculture (USDA), the recent floods are likely to negatively impact the 2022-23 wheat planting area. Sindh province usually accounts for almost twenty percent of national wheat production. However, large areas of Sindh, typically planted with wheat, are still submerged, and it may be several months before the flood waters recede.

With Sindh’s flat terrain, poor drainage, and current high-water table, floodwaters are receding slowly. As a result, the seeding of the 2022/23 wheat crop in Sindh is likely to be delayed and some areas may possibly remain unseeded. Even where the waters recede, farmers are likely to face difficulties in wheat planting as the floods washed away on-farm wheat seed stock in many areas. Additionally, farmers’ purchasing power in the affected areas has also been severely compromised, making it difficult for them to buy fertilisers and other inputs.

Owing to a deficit in the output of the previous wheat crop, Pakistan is slated to import 2.3 to 2.5 million tonnes of wheat in the ongoing year, as per the estimates of FAO and USDA. The FAO predicts that wheat imports in the 2022-23 forecast may be well above the five-year average. In the 2022-23 marketing year (April/March), wheat import requirements are estimated at 2.3 million tonnes, close to the previous year’s well above-average level. The high level of imports reflects the government’s announcement, in July 2022, to import large quantities of wheat aiming to boost availability, amid elevated domestic prices.

As per USDA estimates, given the pace of imports and the domestic stock situation, the 2022/23 wheat import forecast remains at 2.5 million tonnes. The Trading Corporation of Pakistan’s (TCP) most recent import tender, which closed on September 26, 2022, was for 300,000 tonnes. Suppliers only submitted one offer, at $398.92 C&F Karachi ports.

For 2022/23, TCP has purchased 986,000 tonnes, of which, 622,000 tonnes have already entered port, with the balance in transit and expected to arrive by the first half of October. The first consignment of wheat was imported at a cost of $515 per tonne, the second at $404, and the third cargo was imported at $407 per ton. While the government officials have publicly alluded to the possibility of a government-to-government agreement to buy up to 2 million tonnes of wheat from Russia, no such purchase has happened so far.

During the last week of August, the Economic Coordination Committee (ECC) reiterated its objective to import up to three million tonnes of wheat to ensure minimum strategic reserves of two million tonnes. In addition to the imported wheat, GOP has procured around 6.6 million tonnes from the domestic market. The reports of damage to stored wheat and doubts about the timely sowing of the next wheat crop, especially in Sindh, caused wheat flour prices to increase about 20 percent in September.

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