Wheat procurement in the Punjab has been delayed by one week by the caretaker government at a time when the crop size is stated to be lower than normal, which may encourage the private sector to pick up the stocks.

Our planners never know the actual size of any crop. Their estimates are many times contradicted by a larger or much lower quantity than their projections. Wheat is an important food commodity for the people of Pakistan. They can tolerate gas, power, sugar and vegetable shortages, but any hint of wheat shortage creates panic and always results in riots. It happened in 1997, and then again in 2008.

Each time the fault was in government planning. In 1997, there was imminent shortage of wheat that could have easily been arranged from the international market. The caretaker government of that time ignored the issue that resulted in mobs looting the wheat and flour trucks on the roads.

In 2007, it was other way round. We had sufficient buffer stocks from the 2006 harvest. The then government estimated that there would be a bumper wheat crop. It allowed free export of wheat which was short in the international market. The crop size unfortunately was very small and soon after its harvest the private sector pounced in and offered a little higher price to the farmers than the government support price.

The result was that none of the provincial governments could procure enough wheat that could ensure food safety of the country in the winter months when the private sector wheat is exhausted. Since the private sector had bought almost the entire wheat harvested in 2007, they hoarded it in large quantities. There was shortage of wheat in India, Afghanistan and Iran which made the smugglers active. The price in those countries was much higher and the hoarded wheat instead of coming to the local market was handed over to the smugglers. Many wheat and flour trucks were apprehended by authorities in the border areas of the country but many more managed to slip by.

The result was a deep wheat crisis in 2007-08. This crisis was one of the reasons that cost the PML-Q most of the seats in the urban areas and some in rural regions. The city dwellers accused the government of protecting the wheat hoarders as they were known political figures. The small farmers felt frustrated as they parted with their crop at half the price at which it was sold in the open market a few months after harvest.

The surge of world market grain prices in spring 2008, resulted in an extensive debate about the foundations of international agricultural commodity markets and factors that truly triggered such a dramatic surge.

Even though different stakeholders and research groups weight the factors underlying the dramatic price spike differently, there is a wide consensus that the low buffers against adverse demand and supply shocks, such as the end-of-season inventories, have likely been among the most critical and decisive factors that triggered the crisis. There are also serious concerns that the record-low inventories in 2008, encouraged speculation that further exacerbated the price movements, since the shrinking inventories and price increases may have raised arbitrage opportunities and expectations in favour of further continuum of increasing prices. The situation became even worse when countries threatened by severe food shortages imposed new export restrictions and export bans to protect their own inventories and consumers.

Now that grain prices have decreased and are closer to the pre-crisis levels, there is additional support for the view that the market and policymakers were overreacting and that, as such, a large price surge may not have been fully justified by the market fundamentals alone. The crisis has also triggered policy actions that might result in irreversible long-term economic developments. Capital and population-rich countries are considering new means of rebuilding their stocks, increasing their self-sufficiency, and securing their consumers' access to food. Thus, the drastic price surge may also have persistent implications for the international grain market, and a better understanding of these implications requires new knowledge about the relationship between inventories, prices, and price volatility. Even if low levels of food inventories are among the core factors underlying the food crisis, we still lack recent rigorous empirical analysis on the causal relationship between the global grain inventories, international grain prices, and the volatility of these prices. This study complements the existing literature and quantitative equilibrium analyses with a statistical approach.

This year the wheat stocks at the government level are low and it will have to procure a much larger quantity of wheat from the current harvest than in last two years when the government lacked storage due to higher carry over stocks. It is essential for the caretakers to procure enough stocks that could last till the next crop.

The top priority of the caretakers is definitely to ensure free and fair elections and handover the power to the next elected government. But this does not mean that they should forget their responsibilities towards the people of Pakistan. If there is a power crisis it is their duty to address it in the best possible manner. If there is law and order problem the caretakers should take strict action and ensure peace in the country. Similarly, they are to ensure that when the next government assumes power it should have the comfort that the food security of the country is not threatened.

The fact is that the caretaker governments are in control at a time when hectic election activities are going on one side while millions of farmers are harvesting the most important food crop of the country. The wheat has to be procured now as it cannot be left to the next government. There would be no crop left in the fields when the next government assumes power. The farmer must be protected from vested interests. If the crop is good he will get much less than the support price offered by the government from the private sector. Even if the crop is normal the price offered by the private sector will be lower than government price.

The problem with the wheat farmers is that they want to dispose off their stocks immediately after harvest. They fear that if the wheat is left in the open it could be swept away by wind storm or spoiled by even a little rain. These possibilities however rare are there and farmers cannot take the risk. They dispose of the stock to the first reasonable buyer they come across.

Immediately after harvesting the wheat the farmers have to prepare for the winter crops. In the southern part of the country they rush to sow cotton, while in the central and northern areas they go for rice, sugarcane and edible oil crops. Punjab harvests over 80 per cent of the total wheat produced in the country and it maintains almost 65 per cent of the total buffer stock of the wheat. The caretaker government of the province would have to act fast and prudently to procure at least 4 million tons of wheat from this crop. The caretaker chief minister has assured that this quantity would be procured, but the way things are moving, this does not seem possible.

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