Business Recorder (BR) Research

Earlier this week the USDA released its annual report on World Agricultural Production, highlighting a decline in global wheat production of around 5 million tons to 721 million tons through FY16. Similarly, the International Grains Council also expects a decline of 6 million tons as per its own estimates.

For Pakistan, total wheat production is expected to fall from this year 25.5 million tons to 25 million tons in FY16. The area under wheat cultivation is expected to stay at 9.10 million hectares while yield is expected to drop from 2.80 to 2.75 tons per hectare.

For FY15, Pakistan’s wheat production of 25.5 million tons reflected a 1.9 percent decline over the prior year due to unusually long and cold winter weather. And now another 2 percent decline is anticipated in overall production as well as in productivity. Nevertheless, the good news is that we are still sitting on a sizeable surplus which is around 10 million tons. The bad news is that we exported a mere $140,000 worth of wheat in April while wheat imports were at $884,000. It seems the governments import tariff of 20 percent isn working. And for some reason, there seem to be no markets for exports.

One industry source told BR Research that the reason for the prevalent imports is that the type of wheat produced domestically is unfit for making certain types of biscuits and bread. As for the lack of exports, the procurement price is so high that there are no buyers in the international market.

In terms of production, the problem with Pakistan’s wheat industry is mostly mismanagement in the use of fertilizers, lack of better seeds, and lack of proper storage facilities. The Economic Survey of Pakistan 2014-15 states that one kg of fertilizer nutrient produces about 8 kg of cereals (wheat, maize and rice), and mismanagement in this regard could affect yields. It also showed zero imported seeds being used in wheat.

This article was originally published on June 19,2015 in the Business Recorder (BR) research.