The blame game has started with Minfal and Passco singling out the central bank for a possible wheat shortage in the country in FY11. The argument though, lacks justification as those who are blaming the central bank, have the prime responsibility to clear the mess.
There should ideally be no eyebrows raised on the Central Banks refusal to arrange funds for wheat imports as whatever wheat we produce has historically been ample to cater the local demand. In fact, our imports equal the amount smuggled out every year, which is no less than 30 percent of our total what produced - which means we are essentially importing to facilitate the smugglers.
And its not that wheat import is a viable option in the current scenario - it is far from it. FAO estimates the global wheat production to remain stagnant and the demand for the same to grow at 3 percent in the years to come. It is no brainer that the tight situation would definitely lead to higher prices in the international market, which questions the logic in importing the wheat staple in the near future.
Seems like history would repeat itself if we go ahead with wheat imports. Although, currently the international wheat prices are very much in line with the local wheat prices - but the upside risk remains high. Therefore, import of wheat at higher price will definitely lead to price escalation at home as well - just as it happened in sugars case, not so long ago.
This also raises serious concerns over the governments claims of increasing the wheat production to 30 million tons by 2015 - in a time when they can even meet the demand for the very next year. They perhaps have some magic plan in the store for 2015 and if they don , then this claim mirrors the dozens of other such claims.
Government bodies have cited rain shortfall in the Barani areas of Punjab as the chief reason for wheat shortfall. But the argument seems to have less substance as the impact would be no more than 2-3 percent of the total wheat production. Experts believe that this could be sorted out very easily by improving the yield.
The country needs a repeat of last year when the proper utilization of agriculture credit led to 10 percent improvement in yield owing to quality seed and fertilizer usage. The current credit disbursement to the agriculture sector which has increased so far by 9 percent shows a bright picture - all what is needed is proper utilization of the resources. If done - we won need to be importing the food staple.
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