Wheat procurement policy some alternatives.

Wheat is an important staple food crop and has great significance in Pakistan's economy in terms of food security. It accounts for 7.8 percent of the value added in agriculture and 1.8 percent of GDP. Nearly 10 percent of the total population is involved in the production, distribution, and processing activities of wheat. Wheat is a strategic crop and any shortfall in its production can lead to political uncertainty, drainage of foreign reserves, rise in flour prices, and shortages in vulnerable areas.

Successive governments in Pakistan have designed and implemented different policy instruments over time aimed to protect low-income consumers, attain food self-sufficiency and ensure a reasonable wheat supply. This was mainly done by control of trading (public procurement and storage), price support, input subsidies, and macroeconomic policy interventions (over-valuation of the exchange rate). Support price policy was considered an important tool to increase wheat production. The purpose of the price support policy was to encourage production so that consumer needs are met from local supply. However, support price policy has played a limited role in increasing wheat output, rather unprecedented increases in wheat support price have caused huge welfare efficiency losses and worsened income distribution in the rural economy.

In the current wheat marketing system, the private and public sectors co-exist in Pakistan. The private sector is allowed to market wheat at free market prices. Instead of bringing wheat directly to public procurement centers, most farmers sell to middlemen. Such as village shopkeepers and beoparies (middlemen). These traders sell wheat to the public procurement center or to other private traders. Primary wholesale markets (mandies) are well-developed in Pakistan, especially in Punjab. Farmers and middlemen bring wheat to these markets and sell through commission agents (arthies) who are registered in the market committees.

The government procures wheat from producers directly; it releases wheat to flour mills directly and wheat flour consumers through publicly owned utility stores. Before the 18th constitutional amendment, the practice of fixing support prices was with the federal government (now provinces are free to fix their support price).

Provincial food departments and PASSCO procure wheat in harvest months at the government's announced price. The provincial food departments release wheat in lean months at the 'issue...