A number of managerial problems tend to disrupt the supply chain as flour price has touched a record high and the government’s wheat procurement target of five million tons has been missed. And this year’s wheat production estimated at 21.8 million tons is less than the 23.3 million tons achieved last year.

But could one put the blame on the lower wheat production on the near-collapse of the whole supply chain?

According to the Food and Agriculture Organisation (FAO),Pakistan with its per capita wheat consumption of 318 grams a day, needs around 19 million tons for its 162 million population annually. However, the ministry of food, agriculture and livestock (Minfal) says that the country needs around 21 million tons a year, which also includes about one million tons of wheat exported to Afghanistan.

Minfal officials say that there should be no panic in the domestic market as the government has decided to import 2.5 million tons of wheat to enhance its strategic reserves. And yet, all sorts of speculations haunt the market.

“I think, we should either follow the free market or should be able to eliminate the smuggling through the borders to Afghanistan, India, Iran and Dubai,” Agriculture Development Commissioner, Dr Qadir Bakhash Baloch told Dawn.

Dr Baloch estimated that last year more than two million tons of wheat was smuggled out, indicating that there were problems with the existing supply chain. Iran, for the first time exported wheat to India. But that was not the Iranian wheat. It was the Pakistani wheat that made its way to Iran at $200-300 a ton and later to India at over $500 a ton.

Now the ministry of interior has informed the Economic Coordination Committee (ECC) of the Cabinet that it had established 900 check posts on the borders to stop the smuggling of food items.

However, the problem does not end here.

Lately, the ECC imposed Section 144 by slapping ban on the inter-provincial movement of wheat in a bid to enable the Pakistan

Agriculture Storages and Supplies Corporation (PASSCO) and the provinces to achieve the procurement target. The ban was not only a constitutional violation, it led to jacking up of flour price in many parts of the country. Despite the ban, the government could procure only 3.8 million tons.

The Minfal was against the ban but was not consulted by ECC. The ECC lifted the ban last week on inter-provincial movement of flour and not on wheat to ease flour crisis. NWFP and Balochistan do not have their own strategic storage facilities. Both rely on transportation of wheat from Punjab round the year. During any crisis or inter-provincial bans on the movement of wheat and flour, people of both the provinces become vulnerable. Often there are shortages of flour and wheat in these provinces when supplies get delayed for weeks.

Azad Jammu Kashmir (AJK )too has no storage facility. Its go-down is located near Faizabad in Rawalpindi and supplies are often interrupted.

When atta crisis developed in November 2007, the then Federal Food Committee (FFC)had proposed that NWFP, Balochistan and AJK should built storage facilities. The committee recommended that both the provinces and AJK should buy wheat from farmers in Punjab with the help of the provincial government.

Another problem is that it takes months in transporting imported wheat from Karachi ports to up-country. Dr Baloch believes that this problem could be solved by giving imported wheat--a part or whole of it--to Sindh.

Yet another problem in the supply chain link is the attitude of flour mills. From time to time, mills threaten the government with stopping grinding because of the issues related to official wheat quota reserves and fixing the ex-factory price.

Many mills in Punjab have suspended operations demanding the government to increase the ex-factor rates of 20 kg flour bags to Rs400 from Rs380.

Normally, till September, mills grind from their own private stocks from the new crop. After September, the government starts meeting 30 per cent wheat demands of mills through supplies of wheat from official reserves on subsidised rates. But last November when flour price went up and assumed the proportion of a crisis, the government increased wheat quota up to 70 per cent and in some cases even up to 90 per cent. During the wheat crisis before the arrival of the new crop, mills in Sindh totally relied on government wheat.

From the very start of this harvesting season, the problem of quota and price fixation has surfaced. The official wheat procurement price was fixed this year at Rs625 per 40 kg compared to Rs460 last year. Mill-owners may increase flour price if the government does not provide them wheat from its own reserves.

Minfal attributes the ever-rising cost of wheat crop inputs to the unwillingness of farmers to sell their wheat to the government at the official rate which they consider low. Price of DAP is more than double in Pakistan as compared to India where farmers are also given various indirect subsidies.

Unlike Pakistan, the Indian government fixed the official wheat support price at Rs640 (Pakistani currency) per 40 kg this season well on time. When the procurement started the Indian government kept on increasing the support price taking it up to Rs800, and then up to Rs900.

In the last week of May, the Indian government paid Rs1200 to farmers as compared to Rs625 given to Pakistani farmers who have to pay more than double for buying various agricultural inputs compared to Indian farmers. The pro-farmer policy enabled India to surpass this year official wheat procurement target of 15 million tons by achieving 19 million tons.

While the government must pursue various policies to increase per acre yield of wheat by bringing down prices of various inputs, it should completely overhaul the supply chain that breeds speculations, encourages hoarding and smuggling.