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Wednesday July 06, 2022

Should Pakistan worry about India’s wheat export ban?

May 16, 2022

LAHORE: Is a wheat export ban by India that has jolted the world commodity market actually a worrisome development for a grain-deficit country like Pakistan? May be or may not be.

In a short answer; there will be no direct impact on Pakistan as nowadays both countries do not trade with each other. India’s wheat export ban has been aimed at addressing the internal issue of rising inflation. Wheat is not short in India, rather the country is sitting over a heap of grains. It has only imposed a ban on private exports. Government-to-government deals are still open. Neighbours like Bangladesh, Nepal, Sri Lanka and Maldives will obviously get wheat in due course.

So, grain stockpiles are at a comfortable level in India despite wheat yield was hit by a heatwave and resultant low procurement by public sector institutions. However, the Indian export ban can indirectly create some hardships for Pakistan which is already looking for striking an import deal in excess of three million tons, which is a huge quantity in itself.

First of all, because of a robust procurement drive by the Pakistan Agricultural Storage & Services Corporation Ltd. (PASSCO) and Food Department, Punjab, Pakistan may only need about 1.5 million tons of wheat imports instead of presently projected three million tons for 2022-23. Hence, the import outlook may not be as bad as the grain market may have feared for Pakistan.

Unlike India, which could buy less than half the quantity this year against what it had procured last year, stocks with public sector departments in Pakistan are at a slightly better level than last year’s procurement. With close to 5 million tons of present wheat stock with the Punjab Food Department and approximate 2.5 million tons purchase by PASSCO and the Sindh Food Department by end of procurement campaign, the requirement during the September-April period will effectively be met.

In addition to these quantities, the private sector currently holds about 1.5-1.8 million tons of wheat, which is less than what ideally should be available with them in order to independently meet dry-period needs during the May-September period.

It is hard to comprehend why policy makers are currently stretching the procurement campaign unnecessarily. Instead, they should gradually relegate the buying drive to the backburner with a view to making room for registered private buyers including flour mills.

The Provincial Food Department needs to be vigilant and monitor wheat purchase by the private sector. Strict regulations on the last year’s pattern will do wonder and prohibit any pilferage of grains. Tight wheat regulations are also a must in other parts of the country. Close of 2.7-3 million tons buying by the private sector coupled with 7.5-7.8 million tons of wheat in the public sector would be sufficient for ensuring food security in the country.

However, given the requirements of Afghanistan and maintaining strategic reserves, import of 1.5 million tons of wheat is vital for the present government. For this purpose, wheat should be sourced from wherever possible markets on an immediate basis. Otherwise, prices in the international market are feared to increase further while its shortage may further worsen the problem.

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