Abstract of the Study

Pakistan has been in top ten wheat producers in the world. More than 70% wheat is grown in the fertile planes of Punjab. Price floor for wheat grain has been a permanent feature of the government agricultural policy to support the small farmers and self-sufficiency in staple food. However, in 2008, the federal government increased support price by 52% (from Rs.625/- per 40 kg to Rs.950/-) before plantation season. The farmers grew wheat, and there was a considerable surplus came into the market.

The Punjab government successfully purchased a major portion of the surplus in 2009 but could not do well in 2010. The high support price made it difficult for the low-income consumers to buy wheat which is a necessary staple food in Pakistan. They substituted rice for wheat, but production of rice was not enough to meet their demand, so prices of rice also soared. To avoid unrest amongst the urban areas, the Punjab government went for subsidy and launched ‘Ramdhan Package’ and ‘Sasti Roti Program.’ In the first program, the consumers were given subsidized flour during the month of Ramdhan and in the later designated clay ovens (Tandoors) were supplied flour on subsidized rates to cook and sell ‘chappatis’ on cheap rates. The federal government launched ‘Benazir Income Scheme.’

Unfortunately, both governments could not meet their goals adequately for many reasons. On the other hand, the benefits of wheat support price were mainly cashed in on by the better-off farmers or the big landlords. The benefits could not reach the targeted deserving ones for the subsidy. The federal government was at least aiming the most impoverished families in the country with direct cash. The government may look into other options to improve agricultural policies from minimum price support and subsidies to contract farming, insurance of minimum price, vouchers, increase in export, etc. This will create more options for the farmers, less burden on the consumers and taxpayers.

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