The Pakistan Economy Watch (PEW) on Sunday said the country is heading towards a severe wheat crisis and the government will face losses of billions due to its policy problems.
Wheat stocks maintained by different government departments had crossed to an alarming level of five million tonnes due to a failure in exports despite repeated efforts which included jacking up export subsidy many times, said Dr Murtaza Mughal, PEW President.
He said that wheat support price -doubled by the last government to win elections- had provided considerable incentive for wheat growers which resulted in heavy losses for the government.
The support has also caused a shift in growers’ priorities away from other crops and has resulted in shortage of these crops, in addition to the current build-up in wheat stocks, he added.
Dr. Murtaza Mughal said that the area under cultivation of wheat has reached a record high level, production continues to climb, and there is no way to tackle surpluses.
The federal and provincial government had announced a combined subsidy of $90 per tonne for exports of 1.2 million tonnes of wheat which failed as the prices in the international wheat market were almost half of the price of wheat in Pakistan.
This year the wheat prices in the international market have gone down which will put additional burden on the government, he said.
Global stocks are already at record level which will grow further due to better crop making it difficult for government to dispose of the growing stocks.
The situation will emerge in favour of the middlemen who will buy wheat at reduced rates as sowing in some parts of the country has already started, he warned.
