Staple food grains Modern storage, trading and logistics system in demand.

This year Pakistan is anticipated to face a shortfall of wheat. The estimated shortfall will require the country to import 2.5 million tons of staple food grain. This will cost the country US$1.3 billion, besides handling charges to be paid in local currency.

The need to import wheat has once again highlighted the importance of attaining self-sufficiency in the production of wheat and introducing efficient storage facilities and trading systems. In this article, an effort has been made to explore ways to overcome the shortages and contain the outflow of precious foreign exchange.

Wheat is an agricultural commodity and its production is dependent on several factors. This year the crop size is relatively below the target. Therefore, to avoid any price volatility the Government has to import wheat.

Pakistan doesn't have modern grain storage silos and a large quantity is stored in flat-bed warehouses. It is estimated that around 20% of the produce goes stale before reaching the market. If this quantity is saved from going stale, there may not be a need to import wheat. On the contrary, the country may also earn foreign exchange by exporting the saved quantity.

Suggestions to Overcome the Shortage of Wheat

The Government of Pakistan has introduced a warehouse receipt financing system in collaboration with commercial banks. The accredited warehouses have started issuing receipts electronically. The encouraging news is that local warehouses have issued receipts worth one billion rupees. The landmark achievement is that out of these financing has been obtained up to 80% of the total amount of receipts issued.

The strength of electronically issued warehouse receipts hinges upon making agricultural output, eligible for good quality collateral, for availing financial credit, particularly benefiting the small farmers who find it difficult to approach banks for credit to do non-availability of basic collateral requirements of banks. This system has the capability of transforming the agriculture sector in the following manner

(a) The System will be utilized by banks to extend financing, as it has enabled bankslenders to create a charge on the commodity balances through the depository; the charged collateral is then immobilized in the warehouse till the lien is lifted.

(b) Real-time access to the location and quantity of the commodity and providing comfort that the commodity of a stated type, quality, and quantity through the Warehouse Receipt system does...