Scandal in the making: Wheat production numbers exaggerated

Society Pakistan & World Affairs
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Just heard on TV, State Minister for Info. Technology mentioning that in a recent cabinet meeting it transpired that the wheat production number shown at 23 million tonnes by the government had in fact been exaggerated by about 1.5 million tonnes. Subsequently, govt. allowed export of 1 million tonnes of wheat. However, only 800,000 tonnes could be exported before the crisis hit the country. Still, rumors have it that some well connected people r hoarding large quantities of wheat in Lahore.

Govt. has now decided to import 1 million tonnes of wheat after flour prices shot up and the commodity disappeared from the market.

So the question is: Who is responsible for these sexed up numbers? And who benefited from this artificial short fall. There should be an enquiry. I wonder if someone from the govt. will ever be held responsible for so many open robberies being committed with the help of high offices.

ex. Sugar, Cement, Flour, Auto, Fuel, Ghee. All basic commodities minus autos, and all pinching customers.

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Re: Scandal in the making: Wheat production numbers exaggerated

sab acha hai, pakistan has 16 billion in the forex accounts!

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Re: Scandal in the making: Wheat production numbers exaggerated

bit more facts and background info and lot less conspiracy theory would lend a bit more credibility to your “analysis”.

as the story below makes clear, global wheat prices over the last few months have been hitting record highs:

http://www.sundaytimes.co.za/Business/Article.aspx?id=565047](http://www.sundaytimes.co.za/Business/Article.aspx?id=565047)

“EUROPEAN and US wheat prices hit all- time highs this week amid production woes in Canada, Australia and Europe that have helped cut global wheat stocks to the smallest in 30 years.
Drought has returned to Australia, bringing the spectre of withered crops, hungry livestock, grain imports and another surge in the global price of wheat…”

as far as pakistan is concerned govt fixes wheat price in advance to ensure that both consumers as well as producers are insulated from adverse movement of market prices. if market prices fall too low, wheat producers wont grow enough wheat which will cause wheat shortage. otoh, if prices rise too high, consumers wont be able to afford this basic food staple which will cause social unrest.

end of last fiscal year, govt allowed wheat exports since wheat production was greater than demand. however since intl prices were much higher than local prices, wheat producers naturally stopped selling in local market and instead started doing their dhunda with exporters because exporters were offering much higher prices. once govt realised that wheat exports were causing shortages in local markets, it disallowed exports.

currently since export prices are much higher than local prices, wheat producers are hoarding wheat to force govt to increase wheat support prices. in order to pressurize local wheat producers to sell in local markets, govt has decided to import wheat which it will sell at a loss in order to reduce domestic wheat prices. ultimately loss will be bourne by tax payer but since that loss cannot be observed directly, its much safer, politically speaking, for the government to follow this course of action.

btw pak is now one of the major wheat producing countries in the world. pak wheat production is 1/3 of that of india despite the fact that india’s population is 7x larger i.e. per capita wheat consumption is much higher in pak. some info on indian wheat production including current crises:

http://www.bloomberg.com/apps/news?pid=20601091&sid=aNW_lv3Q_dt8&refer=india

India’s Wheat Availability Falls Short of Demand, Minister Says

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Re: Scandal in the making: Wheat production numbers exaggerated

pai jee..international prices r relevant to this issue only to the extent that higher international prices meant more incentive for smuggling and a lot of flour has been smuggled to Afghanistan and India. Common knowledge.

Now coming back. Will u deny that the govt. claimed total production of 23 million tonnes? Our domestic requirement is around 21.5-22 million tonnes. If there was no conspiracy to rob the consumer, please explain the freaking price hike. Yes, I am mad cuz I have to pay for govt's stupidities or over efficiency with the flour mafia. However way u look at it. :)

Also explain the govt's decision to import 1 million tonnes as buffer stock.

I looked at ur article and it is irrelevant to the discussion. :)

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Re: Scandal in the making: Wheat production numbers exaggerated

intl prices are irrelevant to pak if you assume that wheat producers are deaf, dumb and blind. you off course are welcome to make this assumption but i and other rational people dont assume such things. since pakistani wheat producers are aware that their crop will fetch much higher prices abroad, they will try to do all in their power to get higher prices. one way to get higher price is to start hoarding wheat. to call their bluff, govt is importing wheat and will sell it below cost in order to maintain price and social stability. econ 101 logic would tell you that mkt is the best mechanism to ditermine prices but the political cost for govt is too high if it adapts this strategy.

What is the colour of ur eyes
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Re: Scandal in the making: Wheat production numbers exaggerated

^ can you also explain why the wheat was "exported"?

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Re: Scandal in the making: Wheat production numbers exaggerated

captain1, wheat export was allowed in order to enable growers to benefit from rising wheat prices. theory is that more producers earn, greater the incentive to plant more crop which is good for overall economy. other benefit of exports is that country earns more foreign exchange which can be used to buy products pakistan cannot produce such as oil.

problem with allowing exports was that growers started acting in an unethical manner and stopped supplying in local markets. they recieve various subsidy from the govt in return for which they have to meet fulfil domestic requirements. producer lobby is very strong and they felt they could get away but their assessment turned out to be incorrect.

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Re: Scandal in the making: Wheat production numbers exaggerated

Flamie 2 questions (unrelated to each other):

  1. how do we know the 1m tonne (out of 23m) was an intentional overage and not simply a mistake in estimation?

  2. I saw the biz pakistan program where the guy said there is a huge over supply of cement capacity and the reason Lucky Cement was doing well was that they managed to get orders from India. Now I don't understand why prices will go up unacceptably if there is such supply

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Re: Scandal in the making: Wheat production numbers exaggerated

Sahi hay- gharib logon ko bookha maaro kyoun ke unke marney se koi faraq nahi parhta balke, abaadi kam hogi. khas kam jahan pak. to kya hua paki economy to improve hogi. 16 B Forex barh kar 20 B ho jai gee aur army ko aur hathiar mil jaaingay mullaon ko marney ke lye.

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Re: Scandal in the making: Wheat production numbers exaggerated

Welcome to the brave new globalized trade Flame Ji. Where have you been for the last 30 years?

Pakistan, India and other third wolders suffer from not only bad planning or fudged up numbers, but other factors such as medieval marketing and distribution systems also come into play.

Don't you know about the recent "daal buhran" (lentil crisis) in India. Where the Indian planners overestimated production, lentils were exported, thus forcing the prices up in India?

Oh well conspiracy theorists do not want to look at other views. Just a bad-very-bad gernail view suites them fine.

FYI. Our Aaata (wheat flour) is being produced, distributed, and consumed in exactly the same way it was done 100's of years ago. The supply chain is managed by small time whole sale shops, to tiny retail shops. They are not big enough to counter the smuggler's power. If there are any mid-size whole sale shops, they tend to make money by hoarding rather than selling cheap at bulk levels.

This is just a trading mindset that has been consistently present since ancient times.

Unfortunately farm-to-consumer supply is not managed by mega corporation who could potentially put a dent on the vaguries of hoarders and smugglers.

I wish one day Walmart sized 10,00 stores take over the bread supply in Pakistan, then only then you will see a pressure on the suppliers to keep the prices low and shelves filled with bread or Aata.

We must evolve as a nation to be fit to live in 21st century.

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Re: Scandal in the making: Wheat production numbers exaggerated

Is it also an assumption that wheat export is regulated by the govt? If Wheat price in Pak is Rs.2 and in Int'l market it is Rs.2000, the wheat exporter can't do jack unless the govt. allows him to export. And in this case it did.

Obviously bringing these hoarders to justice has no place in the grand scheme of things. Calling hoarders' bluff by importing wheat is a great idea but by the time this wheat arrives, damage will be done, perpetrators having gone scot-free. :)

Moreover, reactive governance. Very efficient model.

supply/demand mantra does not absolve the govt. of its RESPONSIBILITY to regulate the market and competition to protect the consumer.

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Re: Scandal in the making: Wheat production numbers exaggerated

Incompetence or Open fraud. ur pick.

Cartels. The govt. is sitting on a proposed legislation to reform the MCA, while public gets looted :biggthumb

Complaint
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Re: Scandal in the making: Wheat production numbers exaggerated

Part of the last 30 years, I wasn’t even born so good question :smiley:

Try telling that to the poor. 15 wrongs dont make 16 rights.

oh so u want the small time hoarder to be replaced by large multi national corporations? Sure thing pal. Obviously we have no cartels in Auto sector? Cement? Oil and Ghee? What else..hmm oh yeah. Oil Distribution Companies.

mega corporations ki jay ho. Panacea to all our ills. I for one am waiting for our new overlords from overseas to come and fix things up for us. :biggthumb

and in other exciting news, **Flour prices keep rising](http://www.dawn.com/2007/09/18/top9.htm).

**just before the elections, mind u. i am just happy this govt. has no sense of timing whatsoever and is keen on shooting itself in the foot.

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Re: Scandal in the making: Wheat production numbers exaggerated

the fact that flour prices r so high today also has something to do with the fact that the provincial govt''s refused to release wheat to flour mills when federal govt. asked them to. So when the chirriya came, the roshandan was closed and a sign was posted there with one finger salute. Chirriya went back. Happy.

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Re: Scandal in the making: Wheat production numbers exaggerated

LOL!!!

our ever so enlightened economists :)
first it was OIL that rose..and rose..and rose..
then it was tomattos when our general told NOT to eat tomattos

then it was SUGAR buhran..
then it was GHEE/OIL buhran..
then its flour buhran..

and our economists "bhara hua pait farsi bolta hai.. "

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Re: Scandal in the making: Wheat production numbers exaggerated

Good grief did you guys not take a single class of economics in school. Prices of wheat in Afghanistan, Iran and India are higher than those in Pakistan. Naturally part of the wheat is exported or smuggled to fill the void in those markets as they provide higher prices.

Additionally Afghanistan has no agriculture capabilities whatsoever. Thus Pakistan provides nearly 75% of their food commodities. The Pakistani people are not producing food for their own nation. They are rather producing food for two nations. Pakistan and Afghanistan.

I am surprised we have been able to feed two countries for the past 15 to 20 years.

If we want to fix our agriculture market we need to ensure that food does not enter Afghanistan - our main leakage/smuggling point. Or work on methods to boost productions to maintain a low price and feed two countries.

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Re: Scandal in the making: Wheat production numbers exaggerated

Did you catch the news last week that India bought almost. Million tonnes of wheat at record prices (almost 2.5 times) what it was a year ago?

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Re: Scandal in the making: Wheat production numbers exaggerated

Credit goes to the Allah for providing us with the most fertile soil in the world.
Credit goes to our Army for keeping those fertile soil safe from anarchy.

Last but not least,

Credit goes to our land owners, our agriculturists, our farmers, our villagers who work long days and cold nights tending to the farms.

Afghan people are our neighbors, our brothers. If they are hungry how could we go to our beds content with full stomachs?

Moreover they are just 10 million in number, smaller than just one of our big cities like Karachi.

Nah! We can't blame Afghanis for the shortages (We can blame for many things but not wheat problem).

The culprit is our outdated outmoded distribution system. Once we let it organize on scientific basis, we can take care of many hungry people (with God's will off course).

Peace!

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Re: Scandal in the making: Wheat production numbers exaggerated

I do not know why there is so much fuss. Actually, idea is that Pakistan grows and poor become better off. How poor would become better off? Well, they can only become better off when the product they produce rise in prices. Wheat growers, flour mill owners, shopkeepers, and all that work in the industry, all need to earn a bit more and for that prices have to go up.

One should not see that what price has gone up, but should see that what wages are doing. Unfortunately many selfish Pakistanis want that their wages goes up and would never talk about that, but they want that prices do not go up, and that is ridiculous.

One should try to work hard and earn more, and let the market adjust the price. One should not think that yesterday they were paying Rs 2 for a Roti and today same Roti is costing Rs 3, but they should also see and think that yesterday they were earning Rs 10,000 and could have bought 5000 Rotis @ Rs 2 each, but toady they are earning Rs 30,000 and thus can buy 10,000 Roti @ Rs 3 each. This is how thing works. If country would produce more, there would be more to earn for all and whatever prices would do, most would be able to afford more than past too.

**Anyhow: The most likely reason for Wheat shortage: **We should remember that Pakistan is a unique country in the world. Every country works out their food productions and requirements according to their population, than adjust to supply and demands through Import/Export.

But what I know, Pakistan when calculating their Wheat production and requirements, take entire Afghanistan population into account (over 30 million of them). Reason is that Afghanistan does not produce wheat as much as they require and most what they require get smuggled to Afghanistan from Pakistan. Regardless of wheat get short in Pakistan, there are smugglers that make sure they smuggle Wheat from Pakistan to Afghanistan (Pakistan get nothing, as those wheat does not go to Afghanistan using legal trade, but mostly smuggling). Unfortunately it seems that Pakistan government has no will to stop that (due to reason that anyone can guess), and that is bad policy, as that means giving huge food subsidy to Afghanistan for nothing. Pakistan should have complete control over their western border with Afghanistan.

*Same is happening in western border with Iran (other way round), where substantial quantity of Iranian subsidized oil (meant for Iranian local consumption) at fraction of real world standard price, gets to Pakistan through smuggling. *

(It is possible that today, some wheat must be getting smuggled to Iran and India too, as world wheat price has gone up substantially)

What the situation really means is that, if Pakistan wheat price stay below world market price than smugglers would smuggle as much wheat as possible to Afghanistan and then export that wheat to world market, making handsome profit, whereas Pakistani farmers and population suffers. Maybe that is the reason today Pakistan has bumper crop, still there is shortage of wheat in the market, because world price has gone up and most likely heavy smuggling is going on (Russia is major wheat importer, and it is possible that Afghan smugglers are smuggling Pakistani wheat to Russia.

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Re: Scandal in the making: Wheat production numbers exaggerated

It's a state of mind. U know..like delirious, rejected, dejected.

Land of the five rivers.