Pakistan Reader

CWA # 1303
Pakistan Reader
Pakistan and Wheat: From a Crisis to a Scandal

Rohini Reenum
9 May 2024
Photo Source: APP

On 6 May, the Pakistan Tehreek-e-Insaf (PTI) intensified its agitation against the wheat scandal, complaining about charges of corruption against the caretaker government and questioning the wheat import policy of the Shehbaz Sharif-led government. The PTI has called for a judicial commission to investigate the scandal.
 
The “wheat scandal” refers to an alleged PKR 400 billion loss to the national exchequer due to the federal government’s decision to wheat import favoring importers and middlemen at the farmers’ cost. This has fuelled massive protests in Punjab and other areas of the country forcing the government to respond without generating any foreseeable solution.
 
Wheat Scandal in Pakistan: A brief background
The scandal refers to the following. First, the decision to allow unnecessary import of wheat and the total amount imported exceeding the sanctioned limit.  In September 2023, the then caretaker government approved the import of one million ton wheat due to falling international prices. However, according to the data compiled by the Pakistan Bureau of Statistics (PBS), the import of wheat stood at 3.44 million tonnes between July 2023 and 31 March 2024. The estimated cost of this is PKR 282.975 billion, equivalent to USD 1.005 billion.
 
Second, the accusation of middlemen and importers exploiting the farmer. According to a report in The News International, a favorable situation was created for the importers and middlemen by fixing a higher minimum support price at PKR 3,900 per 40-kg and allowing the import of wheat in bulk. This allowed them to “benefit from the situation and earn lofty profits at the cost of voiceless farmers and consumers.”
 
Third, there are questions about the government continuing with wheat import despite a bumper crop, thereby reducing the cost and affecting the farmers. The import of wheat continued after the new government came to power despite an imminent bumper crop. The import of wheat continued into April 2024 despite a bumper crop ranging around 30-32 million tonnes. According to a report in The Express Tribune, “over 600,000 tonnes of wheat was imported during the first two months of the incumbent government, despite the country already having a stockpile of over 113,000 tonnes of wheat.” Further, it has also been reported that the Shehbaz Sharif government has imported wheat to the tune of PKR 98 billion since after the 8 February General Elections. These imports combined with a bumper crop, have led to a situation of wheat surplus in not only government stocks but also in the markets, resulting in a wheat price crisis.
 
Political and Economic Fallouts of the Wheat Scandal
These three developments in tandem have contributed to the current crisis in Pakistan with the following economic and political fallouts.
 
First, economic fallout for the farmers, in terms of the wheat price crisis. An abundance of wheat in government stocks has led it to slash wheat procurement by 50 per cent compared to last fiscal: from 7.8 million tonnes to 4.44 million tonnes. This means that the farmers whose produce will not be procured by the government will have to sell wheat in the market at lower prices due to oversupply of the crop.  For instance, even though the government has fixed the minimum support price at PKR 3,900 per 40/kg this fiscal, the farmers are having to sell their produce at around PKR 2,800-3,000 per 40/kg. The fall in wheat prices combined with an increase in production costs due to higher costs of crucial inputs like fertilizers has adversely impacted the profit margins of farmers and the financial viability of wheat cultivation itself.
 
Second, the political fallouts. The farmers’ protests have not only intensified but also garnered the support of opposition parties like the PTI. As opportunistic as this support may be, allegations of corruption and mismanagement have already put a serious dent in the credibility of both the previous caretaker government and the incumbent PML-N government at the centre. The PTI has blamed both the Pakistan Democratic Movement (PDM) government and the incumbent Pakistan Muslim League-Nawaz (PML-N) government for this debacle.
 
What has been the government response?
Prime Minister Shehbaz Sharif took notice of both the wheat import scandal and farmer’s protests and made efforts to address both economic and political fallouts. He suspended the Secretary Food Security Muhammad Asif and constituted a cabinet committee “to ascertain the reasons for the import of the commodity during the last caretaker government.” Earlier, he had ordered an increase in the amount of wheat procurement target, from 1.4 million tonnes to 1.8m tonnes and directed a complete procurement. The increase in the procurement of wheat is one of the key demands of the farmers protesting in Punjab.

These efforts to contain the fallout of the crisis/scandal has failed to alleviate the farmers’ concerns. They have continued their agitation and announced nationwide protests to be held on 10 May.
 
It is evident that the existing wheat policy, both on import and procurement has contributed to the wheat crisis. It also appears that the government did not anticipate the problem as it has manifested and only rushed to mitigate the current crisis once the farmers’ protests intensified and the opposition started capitalizing on the situation. A lackadaisical and parochial government approach to the crisis is likely to exacerbate it.
 
References
Zulfiqar Ahmad, “Wheat scam: PTI demands judicial commission,” Business Recorder, 7 May 2024
Imran Adnan, “PTI calls for judicial commission to investigate wheat scandal,” Dawn, 6 May 2024
Mehtab Haider, “Who benefited from wheat import?,” The News International, 6 May 2024
“Farmers announce nationwide protests as wheat import scandal explodes,” The Nation, 6 May 2024
Zulqernain Tahir, “Govt ‘reluctant’ to dig deep into wheat scam,” Dawn, 5 May 2024
 “Nawaz summons PM Shehbaz to discuss Punjab wheat crisis,” Dawn, 4 May 2024
Syed Irfan Raza, “Probe ordered into wheat import by caretakers,” Dawn, 3 May, 2024
 “Wheat scandal: PM Shehbaz suspends secretary food security,” The Nation, 3 May 2024


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