Wheat crisis: Real or induced?

Had you invested in wheat or flour in the past year instead of gold, your investment would have grown numerous folds by now, rightly depicted by a comical illustration in a local newspaper.
Atlast, the looming flour crisis, anticipated to mark its presence any time in 2013, hit the country during the first week of the ongoing year, traumatising the poor masses with its intensity. Wheat flour available with a price tag of Rs33 per kg in the CY12 has now soared up to Rs45 - 48per kg, with prices multiplying on a daily basis.
Wheat has emerged to be another severely scarce resource of the country, after CNG. The protracted queues outside utility stores and Kiryana shops raise a red flag on the efficacy of our governments policies who slumbered through the constant demands of the farmer community to raise the procurement price of the commodity and bring it at comparable grounds with their towering cost of production.
Eventually, many farmers switched to other crops, bringing down the cultivation area by over seven percent. To add further insult to the injury, almost three-fourth of the remaining area was brought under wheat cultivation beyond ideal sowing period when government finally lent an ear to the farmers concerns by raising the procurement prices. Reduced cultivation area coupled with sowing after the ideal time, dropped the 2012-13 wheat production forecasts by 28 percent to 18 million tons, as against the target of 25 million tons.
Thus, the forthcoming months are expected to witness another round of stern food inflation characterised by wheat scarcity together with unsympathetic price hike.
Realising the gravity of the situation and the anticipated dearth, the food departments of all the provinces have curbed the wheat supplies to the millers, reportedly in an effort to defy the threats of hoarding and speculation of the commodity. On the flip side, millers and Chakki owners are squabbling the authorities and claiming sufficient wheat supplies or else they would discontinue their operations.
In contrast to the situation discussed above, where the country seems incapable of meeting its own domestic demand, there has been talks of exporting one million tons of wheat to Iran in a barter deal, since last year. However, the contract has not yet materialised due to some hold-ups at Irans end, said an industry insider.
Contesting the wheat deficient backdrop, Aneed Majeed, Chairman Karachi Wholesalers Association, said the country has wheat superfluity, a stock of more than 6.2 million tons which is not only sufficient to meet the domestic demand but also available for export. He further told BR-Research that the dearth experienced at present is symptomatic of bungling policies and lack of governance, not lack of commodity. If the country was deficient of wheat, it would have never signed an export deal with Iran at a price lower than international rates.
A local think-tank underscored that the wheat shortage is artificially induced and that the government officials are amassing wheat in an endeavour to exploit the millers and poor masses by releasing the commodity later with the new crop to garner superior margins. On the flip side, another group of industry players opined that the wheat shortage is due to smuggling of wheat from open market to Afghanistan.
Whether actual or induced, the deficiency is witnessed. Whoever is the culprit, the ultimate victim of this incongruity is the general populace, unable to procure the commodity even at heightened prices.
The federal government recently took charge of the situation by announcing to disburse 0.1 million tons of wheat to each province and 5,000 tons to each flour mill on first come first serve basis in an effort to combat the current price hike.
Going ahead, spiralling prices of the staple food items could have grave political ramifications. Thus the government, who claimed that there would be no wheat shortage in the country in 2013, should walk the talk and take significant moves to bring down the wheat prices and pacify the poor masses, already grappling against yawning food inflation.