Production, consumption, and price policy of wheat in Pakistan

Wheat production sector in Pakistan has shown an impressive growth rate with the availability of the new technology in the late 1960s. However, since the early 1980s, the growth performance of wheat sector has not been satisfactory. In the recent years, significant deceleration in the growth of wheat production and the resulting increased wheat imports have led to a serious debate on the role and the potential of the new technology, and the effects of price policies on the wheat sector. This study is in response to a recent wheat policy dialogue, addressing some of the critical issues related to production, consumption, and price policies of wheat in Pakistan. Specifically, the study analyzes growth and instability in wheat production, examines trends in wheat consumption, evaluates wheat price policies, and makes policy recommendations.;The findings of the study indicate that the growth of wheat production continues to decelerate. This phenomenon may be attributed to the lack of further improvement in the available new technology, slow down in the use of key inputs, and unfavorable producer wheat price policy. The study argues that the new technology has significantly decreased instability in wheat production and has substantial potential to increase and stabilize wheat output. The study finds that wheat support prices are neither related to the cost of production of wheat nor to international wheat prices. The support prices are mainly based on the average wholesale or release prices of wheat which in turn are fixed on the basis of their perceived effects on the cost of living. The analysis shows that Pakistan has suffered from huge efficiency and welfare losses due to wheat price distortions. The study argues that the current wheat price policy is not only worsening the income distribution in the country but also has adverse effects on the growth of wheat sector. The overall conclusion of the study is that there is no compatibility between the instruments and the objectives of the wheat policy set by the government. The study identifies the priority areas and provides detailed policy recommendations for the overall development of the wheat economy of Pakistan.