he Punjab produces nearly 80 percent of the country’s wheat. This year wheat was sown over 17.5 million acres in the Punjab out of the total cropped area of 30 million acres. The wheat crop consumes a major share of the irrigation water supplies. It also consumes the largest amount of fertilisers, weedicides, energy (tubewells and farm machinery) and working hours. It has an immense social and cultural impact.

The political economy of food security in the region revolves around wheat. We consume nearly 124kg wheat per head annually, which is among the six highest in the world.About 75 percent of the calories in our food are derived from wheat.While we have surplus alternative sources of calories (2,200-2,400 Kcal/head/day) for human consumption as rice, potatoes and maize, wheat dominates due to the taste preference.Governments, therefore, provide incentives for the farmers to prefer wheat for the Rabi crop. There is room to educate the masses to diversify diets for a healthy life.

The heavy reliance on wheat indicates a lack of health consciousness. A significant fraction of our population suffers from gluten (wheat protein) intolerance, yet there is an element of addiction to it. We have a burden of 40 percent malnourished population. Globally, the least nutritionally deficient countries consume a mix of diets containing wheat, maize, soybeans, potato and rice, as staples. Rice and potato consumption in the country has been rising steadily. Direct consumption of maize is still limited,although it is a cheaper and equally nutritious option. Blending maize with wheat in flour as a daily diet can go a long way in making our population nutritionally healthy and economically secure and dilute the political economy of wheat.

The wheat economy of the country is a cause of low diversification, particularly lower acreage of oilseed crops. As a result, import of edible oils and soybeancurrently stands at around $5billion. The current policy is aimed at plenty of flour supply at affordable price to the urban consumer. The farmer is at the receiving end of this wheat policy; flour mills, importers and the middleman are its major beneficiaries.

The current market environment can shake the farmers’ confidence. There is a strong likelihood of a decline in wheat acreage over the next few years. Poor returns from wheat will hamper investment in the next Kharif crops (maize, rice, cotton). The silver lining is the government’s exit as a major player in the market. The decline in wheat acreage can promote diversification in favour of oilseeds and pulses that we are currently importing. The follow-up surge in the wheat prices over the coming years can create an environment for a better technology uptake for wheat to break the productivity barriers. The wheat productivity can be doubled through seed replacement, drill/bed planting, balanced fertiliseruse and efficient harvesters. There is a scope for reduction in wheat acreage by 4-5 million acres without compromising the total output, provided that competitive markets are allowed to operate. The spare acreage will be enough to allow for import substitution of edible oil, soybean and pulses.

The political economy of grains is a global phenomenon. Under PL480, the United States government procures agricultural produce to incentivise the farmers and uses the yield to assist to the needy across the globe. Market and credit schemes for the farmers are in place. This includes the Price Support Programme providing loans at the time of harvest as interim finance so that the farmers do not have to rush to sell the produce. The commodity is treated as collateral. The US Department of Agriculture, Agriculture Marketing Service authorises agricultural commodity warehouses under the United States Warehouse Act to store grains (strategic and trade stocks). The USDA maintains a live dashboard of commodities in storage and the trade. However, there is hardly any public procurement, except for PL480.Incentive streams and regulatory framework other than MSP(minimum support price) must be tested in Pakistan.

The current market environment will shake the farmers’ confidence. There is a strong likelihood of wheat acreage decline over the next few years. Poor returns from wheat will hamper investment in the next Kharif crops (maize, rice, cotton). The silver lining is the government’s exit as a major player in the market.

In India, government announces indicative price for 24 commodities based on empirical evidence of cost of production to ensure a fair return to the farmer.The Commission for Agricultural Costs and Priceshas outsourced the data collection and analyses to19 agricultural universities for different commodities. The evidence generated is used to announce indicative price. The government intervenes to maintain the market price around the indicative price without being a major buyer. However, the Indian Punjab and adjoining states enjoy liberal government handouts beyond the indicative price. The Indian government has been trying to rid itself of the burden of public procurement through new legislation that has yet to work.

In Pakistan, minimum support price for wheat has been around since its inception. The public procurement became an important instrument with the adoption of Green Revolution technology packages leading to plenty in wheat production. Agriculture Prices Commission of Pakistan was set up in the late 1970s but vanished in the later years. The current MSP mechanism is arbitrary at best. It works bestif the prices are announced before the onset of sowing season, which is often not the case.

In 2022-2023, the Sindh government announced a Rs4,000 per 40kgMSP mid-season while the federal government was undecided until February 2023 when Rs3,900 was announced. The government then used abrasive measure to meet the procurement targets during the 2023 procurement season because the market prices were competitive. That was the perfect time for exit as the farmers would have ignored the government decision. The current procurement year was predicted to be a year of plenty. The government remained undecided on MSP till the end. The imported wheat further complicated the matter.

Enough has been written in these pages about the wheat imports and market crash. I have compared the wheat support price fixed by the government since the year 2000 with the world averages. The MSP has been lower in Pakistan in more than 50 percent of the years. During four of the past five years, it was lower than the world prices. The current year is an exception. That’s when import manipulation occurs.By the same token, export of wheat should have been allowed when the international market was higher than the local market.

Procurement and holding of strategic reserves by the governments and families is an age-old practice. However, public procurement has been plagued with problems. It is less than 20 percent of the total production, yet, it has a price determining role in the market. The price threshold it establishes benefits the farmers in some years but not always. The bad part is use of administrative powers under Section 144, always against the farmers’ interest. The government is burdened by circular debt and storage losses and official intervention is not allowing the development of private storage and competitive markets. It is also responsible for rent seeking behaviours.

Comparing wheat with rice and maize can provide useful insights. There is no government intervention and the two crops have been booming year after year. The technology applications (hybrid seed, complete nutrition solutions, mechanisation and plant protection) are being updated. While in case of wheat, a majority of the farmers are using saved seed and there is very little drive for optimisingother technology applications. The difference between the two cases is that of market driven maize and rice crops vs government interventions in wheat. The production of maize and rice has nearly quadrupled over the past two decades.

Indicative prices based on empirical evidence, global price parity, careful use of import and export options and controlling cartels can create a better technology environment. A revamping of research and development framework is required for an informed decision-making process to occur.

Government should restrict public procurement at market prices for strategic reserves and make interventions for market stabilisation. It should act as a strong regulator and not as a market player. The current incentives will hardly benefit the farmer.The process is simply not farmer friendly. For many, the six bagsrule and use of apps to register is still Greek. Moreover, the intervention has come too late to be of any consequence to small farmers. The intermediaries shall take advantage of the situation.

In principle, I support the current government’s procurement strategy (lowering the targets), but the ‘right decision’may have been taken at the ‘wrong time.’ A similar decision last year would have been easier to implement and defend. Another alternative is to phase out public procurement over several years.

The writer is the vice-chancellor of the University of Agriculture, Faisalabad