Microeconomics 2

Registration #: 2132163

Topic of Presentation: Production of

wheat and its supply and demand in
Pakistan

Presented by: Mohammad Zawar

Introduction:

Agriculture accounts for about one-fourth of Pakistans GDP. More than one-third of
cropped acreage is planted to wheat. Wheat is the staple food of people in Pakistan.
Depending upon the different growth rates of population, the wheat requirements
vary from time to time that creates complications for policy makers .The main
objective of the study was to forecast accurately the population and wheat
requirements in Pakistan.

Pakistan is the 9th largest wheat producer country, accounting for 3.04 % of the
world's wheat production from an area of 3.57 % of the world FOOD AND
AGRICULTURE ORGANIZATON (FAO) Wheat is the leading food grain of Pakistan and
being staple diet of the people. It occupies a central position in formulation of
agricultural policies. It contributes 14.4 percent to the value added in agriculture and
3.1 percent to GDP.

Planning is fundamentally a process of thinking ahead and anticipating difficulties

through rational actions based on experience, prudence and imagination to conduct
the course of development so as to realize the pet and professed goals. The longterm supply projections of agricultural commodities prove helpful for formulating
government policies with regard to production, consumption, prices, procurement,
marketing, storage and domestic and foreign trade. There is no second opinion on
the importance of Agriculture for its being key numerator in the sustainable growth
and development of the economy of Pakistan. It is a vital sector, providing food to
the fast-growing population of the country.

Punjab excelled in wheat production last year. The officials concerned conceded
that in southern Punjab crop output averaged between 30 and 60 mounds per
acre. Punjab is the main wheat producer in Pakistan.

In Pakistan More than eighty percent of the people consume wheat as their
necessary food ingredient. More than forty percent of the cropped area falls
under wheat every year.

Pakistan has faced many times the shortage of wheat, except leaving the era of
GREEN REVOLUTION. Some shortages are faced by Pakistan through bad
policies of government and some are faced due to natural disaster but
sometimes Pakistan has the surplus amount of wheat and the surplus amount of
wheat usually gone for exports.

provinces (Baluchistan, Khber Phaktoon Khua and Sindh). Punjab produces more
then the all other province because of the agriculture land. And the land is
distributed in to two types,

85% of wheat production takes place under irrigation system (Tube wells, Canals)
15% of wheat production takes place under (rainfed barani) areas.

Literature Review:

In Pakistan the production of wheat mostly remains high in many eras but
due to improper policies of previous government Pakistan faced the shortage
of wheat like in the era of General Pervez Musharaf, the production of wheat
was in surplus, when they completed the domestic demand the remaining
quantity was exported by the orders of Shouqat Aziz the P.M. When they
exported the remaining quantity, suddenly Pakistan faced the wheat crisis,
so they imported the quantity to fulfill the domestic demand. Pakistan should
never face the shortage of wheat the one reason behind this is that Pakistan
is the 9th largest wheat producing country. Some of the previous
governments took serious steps in order to increase the supply of wheat. Like
the land reforms in the government of Zulfiqar Ali Bhutto and General Zia-ulHaq. The idea of the land reforms was given by Zulfiqar Ali Bhutto and was
later implemented by General Zia-ul-Haq.

Saboor (2003) conducted a time series analysis for wheat supply projection
in Pakistan and concluded that it appears that total cultivated area increased
due to changes in cropping pattern, higher cropping intensity, increased
demand from the industry, better marketing facilities and varying efforts of
the government to promote agricultural production. Similarly, the analysis of
the past yield trends indicated that there had not been a significant break
through in the average yield per hectare. However, a rising trend in yield
during some period was due to the use of improved varieties of wheat,
increased water supply through installation of tube wells, increased use of
fertilizers and plant protection measures.

The following table shows the wheats production area in

Provinces

Province

Area (Million
Hectares)

Percentage of total
area

Punjab

6.635

76

Sindh

1.059

12

KPK

0.730

Balochistan

0.340

Total

8.665

100

Production:

Wheat is the main Pakistani dietary staple and the Government of

Pakistan (GOP) considers it the key strategic commodity as 80 percent of
farmers45 percent of the total population depend on it for their
livelihood, as a result, its the basis of the countrys food security.
Consequently, the GOPs agricultural policy is heavily centered on wheat
through price support programs and export interventions. In MY2013/14
wheat production is forecast at 24.0 million tons, in MY2011/12 the
wheat production projection was 25 million tons but failed to achieved
the target and the production remains at 21 million (est.).

In 1980s the government introduce the procurement price at that time

the price was set at Rs. 2.15/kg in order to increase the productivity of
wheat.

The Government of Pakistan (GOP) raised the procurement price 14

percent for the current years crop from Rs.1050 per 40 kg ($292/ton) to
Rs.1200 per 40 Kg ($312/ton), although farmers organizations maintain
that the increase is not sufficient. An additional 5,000 hectares will be
cultivated from last years total area of 8.66 million hectares.

Steps taken by different governments to increase the

productivity of Wheat

Land Reforms of 1959 & 1972

What are the land reforms and why government implement it?

The land reforms means distribution of land among the tenants and taking the
land from those who do not cultivate it, to small farmers (who wants to cultivate
the lands but dont have lands).

Features of land reforms 1959 & presented by Ayub khan:

Ceiling of landholdings 500 acres irrigated land, and 1000 acres unirrigated, or
land allowed to bring landholdings of 36,000 produce index units (PIUs).
Resumed land first to be sold to tenants and then to small farmers.
Abolition of Jagirs.

Features of land reforms 1972 & presented by Zulfiqar Ali bhutto:

150 acres of irrigated land, and 300 acres of unirrigated land, or 12,000 produce
index units
No compensation to land owners.
Land revenue, water rates, and seeds costs carried by land owners and cost of
fertilizers and pesticides to be share equally.

Green revolutions impact on wheat production in Pakistan

Green revolution was introduce world wide and it had great impact on the
productivity of agriculture products.

Pakistan also took some benefits from this technology.

Regarding the wheat production, before the green revolution the formers
uses the old pattern of cultivation.

After using the green revolution patterns formers increases the productivity
on the same land in less time and in very efficient way.

Green revolution includes, High yielding verities of seeds HYVs, tractors,

tube wells, fertilizers, pesticides.

In the 1960s the HYV of seeds of wheat, developed by international wheat

and maize institute in Mexico. These seeds were experimented in the same
year.

The impact of these seeds was that the wheat production increased by 91%.

The Contribution of wheat in GDP

Years
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001

Production in Tons
14565
15684
16157
15212
17002
16651
18694
17858
21079
19024
18227

2002

18227

2003

19183

2004

19500

2005

21612

2006

21277

2007

23295

2008

20959

2009

24000

2010

23900

2011

25000

2012

21 million

Exports of wheat

The table shows the export

of wheat to countries

Country

Quantity in Tons

Afghanistan

500,000

Srilanka

200,000

UAE, Qatar, Oman

40,000

East Africa (Sudan,

Yemen, Kenya)

30,000

Bangladesh

30,000

Total

800,000

Supply and Demand in Pakistan:

MY 2013/14 wheat production is forecast at 24 million tons to feed 180.3 million

people.
According to the data of year 2012 the countrys total wheat demand is projected
at around 22 million tons to feed 180 million people. Market players insist that
Pakistan also caters to the needs of an additional 1 million Pashtoons living across
Torkhum border in Afghanistan. So the actual demand comes to about 23 million
tons. This will lead to increase in the price of wheat per 40 kg.

According to the data of year 2000 the projected supply for seed, feed and waste,
16.0 million tons are available for domestic consumption versus a demand, of 19.1
million tons. This gap could be closed through trade or price increase.

The total wheat supply this year inclusive of carry over stocks of three million tons
from last year is expected to be about 2.5 million tons.

Chaudhry Mohammad yousuf, Chairman Pakistan Floor Mills Association was also
not too enthusiastic. I do not see wheat price rising in the near future, he said
confirming comfortable demand and supply situation.

Hurdles that disturbs the market forces in Pakistan

(Regarding Wheat)

Natural Disasters (Floods, Earthquakes)

Broker (Middle man) Should by eliminated.

The government policies should be implemented instead of just keeping

on paper work

Refuges should be eliminated

Smuggling of wheat

Fertilizers, High yielding verities of seeds (HYVs), Pesticides should be

provided on time

Monopoly power and Hoardings should be eliminated