The one-day workshop on ‘Deregulating the Wheat Sector’ in Islamabad on Friday, organized by the Ministry for Food Security and Agricultural Research heralded the implementation of one of the most radical and intrusive recommendations of the International Monetary Fund, one which has the potential to plunge the country into chaos if not handled carefully. Wheat is the national food staple, and is the single most important crop in the country. It thus underwrites the agricultural sector. It was important enough for its rationing to be introduced in 1942 during World War II, a system which continued into Pakistan’s existence, and which was finally abolished only in 1987, when wheat autarky was achieved. However, under the PTI government, international trade began, with wheat being exported, and then re-imported to meet the demands of the population.
The government has provided a minimum support price, by its willingness to buy at a particular price. It has also controlled the inter-district and inter-provincial movement of wheat at harvest time. That has meant the private sector also has to match that price. The IMF wants a complete deregulation, and for the government to get out of the business of wheat, and has made it a conditionality of its current programme. With the first review looming, the government is anxious to show progress on this, an anxiety increased by revenue shortfalls. The problem with this condition is that it could trigger protests if mishandled. The example of farmers’ protests in neighboring India is frightening enough for the government, though it would leave the IMF unfazed. The trick will be to abolish PASSCO, but to transfer its storage facilities, along with those of Punjab and Sindh, to a single state-owned enterprise, jointly owned, which would store strategic reserves.
The government should understand that where food staples are involved, it is not simply an economic question, but a cultural one too, where tempers run high, and logic may have to cede space to emotion. The PTI government failed to take care of this, with the result that it had to weather a huge scandal. Keeping in with the IMF may indeed be a cherished goal, but ensuring a guaranteed supply of wheat flour to the populace is also essential. The government may feel that it can meet the IMF’s condition without sparking off a farmers’ rebellion, but for that it will have to ensure that its handling of the transition will have to be both deft and sensitive.
