This article provides a quantitative analysis of the effects of Pakistan authorities domestic wheat procurance. gross revenues. and trade policies on wheat supply. demand. monetary values. and overall rising prices. Analysis of monetary value multipliers indicates that additions in wheat procurance monetary values ( one means of advancing domestic procurance ) have comparatively little effects on the overall consumer monetary value index. Partial equilibrium analysis of wheat markets suggests that fluctuations in production. instead than market use. are plausible accounts for monetary value additions in recent old ages. Comparisons of domestic and international monetary values suggest that advancing private sector imports is one option for increasing supply and bracing market monetary values. peculiarly in old ages of production deficits. Overall. this paper concludes that market forces play a dominant function in monetary value finding in Pakistan. and that policies that promote the private sector wheat trade can both increase monetary value stableness and cut down financial costs. JEL categorization: Q11. Q18
Keywords: Food Policy. Food Price Stabilisation. Agricultural Policy. Food Price Inflation
Wheat plays a cardinal function in Pakistan’s nutrient economic system. both in footings of production and ingestion. Because of the importance of wheat. consecutive authoritiess of Pakistan since Independence have intervened to a great extent in wheat markets. securing wheat at administratively set monetary values to back up husbandman incomes and subsidizing wheat gross revenues to flour Millss or straight to consumers with the aim of bracing monetary values at degrees low-cost to consumers [ Cornelisse and Naqvi ( 1987 ) ; Hamid. Nabi. and Nasim ( 1990 ) ;
Dorosh and Valdes ( 1990 ) ; Ashfaq. Griffith. and Parton ( 2001 ) ; Ahmad. et Al. ( 2005 ) ] . Significant stairss were taken toward liberalization of wheat markets from the late 1980s to 2000. However. after back-to-back comparatively hapless wheat crops from 2002 to 2004 led to high market monetary values for wheat. the federal authorities. every bit good as the authorities of Punjab. took several policy steps designed to increase supplies. add to authorities stocks and stabilise monetary values. These policies included subsidized gross revenues of authorities imports and the infliction of limitations on conveyance of wheat. Wheat policy once more shifted in 2005. as procurance monetary values were raised. limitations on conveyance of grain were removed. and private imports encouraged.
Paul Dorosh is Senior Economist. Spatial and Local Development Unit. Sustainable Development Network. World Bank. Washington. DC. Abdul Salam. former Chairman. Pakistan Agricultural Prices Commission. Islamabad. is presently Professor of Economics. Federal Urdu University of Arts. Science and Technology. Islamabad. Authors’ Note: We wish to thank Sohail Malik. David Orden. and two anon. referees for helpful remarks on this paper. We besides thank Hina Nazli. who assisted with assorted tabular arraies and statistical computations. Any mistakes and skips are the duty of the writers. The positions expressed in this paper are those of the writers and do non needfully stand for the positions of their respective.