Miller Magazine Issue: 142 October 2021

93 Country Profile MILLER / OCTOber 2021 several policy initiatives. These initiatives included increasing the minimum support price for the 2021 wheat crop by 23 percent from PKR 1300 to PKR 1600 per 40 Kg ($250/MT), support to wheat pro- ducers in the form of subsidies for fertilizers, and a renewed focus on wheat research. USDA projects Pakistan’s 2021/22 season wheat production to 26 million metric tons (MMT), three percent higher than last year’s wheat production of 25.2 MMT. 2020/21 wheat consumption is estimat- ed at 25.8 MMT while MY 2021/22 consumption is forecast at 26.3 MMT. WHEAT MILLING INDUSTRY Pakistan’s wheat milling industry is privately owned. There are about 1,000 flour mills in Paki- stan, which meet the consumption needs of about 40 percent of the population, with the balance met by on farm consumption. The disbursement of gov- ernment-owned wheat to flour mills is managed in an effort to ensure that sufficient wheat is available throughout the year. Wheat consumption patterns have been largely unchanged although in some affluent urban areas, consumer preferences are gradually shifting from higher whole grain to lower-extraction flour and traditional flatbread to western-style loaf bread. Traditional home-ground flour is also losing favor to commercially milled flour. Specialized products like cereals suited to the changing lifestyles in the urban areas are also gaining interest among con- sumers. Pakistan has bought wheat regularly in the global market in recent months to boost domestic sup- ply and cool prices. Pakistan’s MY 2020/21 wheat imports are estimated at 3.4 MMT. MY 2021/22 wheat imports are forecast at 1.0 MMT. Almost all wheat imports during the current marketing year are being sourced from Russia and Ukraine. The government’s June 2020 decision to suspend the 60 percent duty on wheat imports is still in effect. Consequently, all wheat imports are currently en- tering duty-free. Prime Minister Imran Khan warned if food crops production did not increase and the population ex- plosion continued, the country might face famine and poverty in the years to come. Addressing the Kissan Card distribution ceremony on 24th Sep- tember, he highlighted the importance of making Pakistan self-sufficient in food crops. The prime minister said despite having much fertile lands and bumper wheat crops, the country had to import four million tons of wheat last year. In the past year, Pakistan has undergone a histor- ic shift from being an exporter of wheat to a major importer of wheat. The main reason is that increas- es in wheat production are not keeping pace with population growth, mainly due to the adverse im- pact of climate change and a lack of investment in agricultural research. It should be noted that during MY 2018/19, when Pakistan exported around 2 MMT of wheat, the beginning stocks were 4.7 MMT. At that time, managing such large stocks was a challenge. The government wheat procurement operation is fi- nanced by banks, which charge a markup against their investment. To reduce the cost of maintain- ing such large stocks, a policy decision was made during MY 2018/19 to reduce the stocks to around 2 MMT, thereby enabling Pakistan to export 2 MMT of wheat. At that time, the government was con- fident that the country’s future wheat production would meet its consumption requirements in the coming years. However, that did not happen, and subsequently lowered wheat supplies compelled the government to drop the 60 percent duty and initiate the importation of wheat. An additional factor contributing to the current marketing year’s record imports is the govern- ment’s continued push to rebuild its strategic re- serves in the wake of pandemic-related spikes in demand and to offset the threat of potential pro- ductions losses from locust attacks. Pakistan needs a coordinated approach and sustained policy to de- termine the size of its intended wheat stocks. If the present ad hoc approach is continued, the country is likely to face uncertain market conditions which will put stress on the supply and demand situation. Pakistan is likely to remain a wheat importer un- less sustainable policy interventions are under- taken to address the emerging challenges from climate change, the lack of investment in wheat research, and the lack of quality seed. Pakistan’s MY 2020/21 and 2021/22 wheat exports are estimated to be around 300,000 MT. The exports represent the cross-border trade between Pakistan and Afghanistan. Afghanistan has traditionally been a huge market for Pakistan but due to depleting stocks and a