Points to Ponder April 2024
Wheat as Food or Wheat as Lucre?
The country is going through a period of dismal debt and economic crisis that is further worsened by the climate crisis. Government policies do not necessarily help in alleviating the dire situation. While the government had been expecting a bumper wheat crop, and directives were given for ‘good price’ for the farmers, and ensure availability of the staple crop in the market, the final result can be considered anything but successful. While the crop itself was damaged due to heavy rains in parts of Pakistan, there were bureaucratic delays in setting procurement centers in various points in Sindh, resulting in farmers selling their produce at PKR 3,500/40kg, which was much less than the government procurement price of PKR 4,000/40kg. According to another report, the procurement price set by Sindh government was at PKR 4,600/40kg.
In Punjab, farmers also voiced their dissatisfaction with the support price set by the Punjab government at PKR 3,900/40kg, which was the same as last year. According to news reports, millers and stock buyers were offering PKR 2,800/40kg as compared to the official support price of PKR 3,900/40kg.
Rich farmers’ representatives like the Sindh Abadgar Board (SAB), have rejected the price set by the Sindh government. The economic and debt crisis has led to huge price increase for agriculture inputs including chemical fertilizers, petrol and diesel, and even though with a good bumper crop, farmers suffered losses due to traders’ monopoly. Farmers in Punjab, as well as the Pakistan Business Forum also critiqued the high input prices, while also pointing out the possibility of wheat smuggling by hoarders and smugglers. Sindh Abadgar Itehad (SAI) has also accused the agriculture extension department of corruption having ‘stomached’ PKR 4 billion that had been earmarked for flood impacted farmers in 2022, and has demanded a ‘high-profile inquiry’ for misuse of public funds. Allegations against corporations have been levied for charging over-market prices for fertilizer. These allegations do have credence as an inquiry by the Competition Commission of Pakistan (CCP) has revealed that the fertilizer sector secured a whopping subsidy on gas to the tune of Rs152 billion but never passed the benefits on to the consumers.
In addition, the supply of bardana has been curtailed and hence farmers were unable to sell wheat at government set support price. What is to come in future is clear from Balochistan government’s announment that starting from next year, it will not provide bardana to the farmers but support them to buy the bags from the market. Such measures leaves farmers wide open to market shocks, a market that is monopolized by the rich and the powerful.
Before wheat harvest had started, government had allowed the private sector to import about 3.2 million tons of wheat. Unlike the farmers, millers were happy with the government’s policy allowing wheat import by the private sector, as according to them, it has given them freedom from ‘Sindh government’s blackmailing practices.’ Whether, these allegations are true or not, there is no disputing the fact that the bulk of small farmers have suffered hugely through increased agriculture input prices as well as lack of government support in selling their harvest, and falling wheat grain prices in the market; all of these factors have combined in pushing them further into debt and increased hunger, especially landless farmers and the urban poor.
Apart from the wheat fiasco, there is general crisis in the agriculture sector. The agriculture growth target of 3.5 percent set for 2023-24, is in doldrums due to ongoing rains impacting major crops including wheat. Other Rabi crops such as mustard and canola, and gram have also suffered, though sugarcane is expected to benefit. On one hand, there is high input cost, while on the other hand, the commodity prices for major crops such as wheat, cotton and maize have dropped by 25%. The protests by the farming community seem to have been heard, but really to no avail. The final conclusion by political big wigs was that the caretaker government was at fault, as it had allowed for the import of wheat in the first place.
One can point out the fact that it is the elected government that has increased gas prices causing an increase of urea price by around PKR 1,000/bag. This step is going to impact cotton yield, as famers will not be in a position to cultivate the cotton crop to the capacity required. It is being reported that the outlook for the upcoming cotton crop is not very promising due to difficult weather conditions, irrigation water scarcity, and the sky rocketing prices for agricultural inputs. Cotton contributes more than 60 percent to the total national exports, and ultimately this further hike in production cost will result in lower cotton yields impacting industrial production.
An interesting editorial in DAWN points out the fallacy of allowing support provided to farmers on wheat production, as it diverts farmers attention from value added crops to wheat; instead of providing support to farmers on wheat production, there should be complete deregulation of the wheat economy and linking it to the global grain market.
Such policy emphasis of course comes from those who support monopoly capital, and are heedless to escalating food prices which leaves millions suffering from hunger and grinding poverty. Actors pursuing neoliberalism and free market ideology are also not bothered about the millions of small and landless farmers who have played a pivotal role in wheat production, but are unable to buy the grain for their households. It should be noted that raw food exports that continued to expand in March, with a 16.35 percent increase to $685.03 million, up from $588.76m in the same month last year, has led to high food prices for local population.
Might is Right!
For many decades now, there has been unabating pressure from international financial institutions to adopt neoliberal policies for economic growth, including in the agriculture sector. From digital agricultural loans to farmers through organizations like Karandaaz (a non-profit receiving funds from Melinda & Bill Gates, that promotes digitalization of financial services including digitalization of the tax system), to modern agriculture warehousing through Electronic Warehousing Receipt (EWR) financing, all measures that allows agricultural commodities to be traded nationally and internationally. Digital marketing is in essence for the richest segment of farmers in the agriculture economy, and marginalizes the small and landless farmers.
In the same vein, there is continued push for enabling environment for private sector investment in aquaculture value chains for national and international markets. VC Dr. Dr. Iqrar Ahmad, Vice Chair Faisalabad Agriculture University has also urged the private sector to invest in high-efficiency irrigation.
Trade liberalization in agricultural production continues, allowing corporate farming and joint ventures with other countries. According to Saudi Arabia, Saudi agriculture corporations are interested in joint ventures for improving value chains in the agriculture sector, with a lofty vision of Pakistan becoming a ‘bread basket for the kingdom’ as well as for the entire region.
Pakistan and Iran are also bolstering their trade relationship, with annual trade volume to be increased to $10 billion. The relationship has been stagnating under the impact of geopolitics directed by trade sanctions by the US on Iran. While, Pakistan is on a path to increasing trade with Iran, US and Pakistan have renewed a key framework to promote bilateral trade, the Trade and Investment Framework Agreement (TIFA).
It is indeed interesting that though free market economy seems to be the bible for international trade forcefully thrust by US and other G7 economies, but when it comes to trading with Iran, a different beat is heard. Pakistan and Iran’s bilateral trade plans, especially in context to “setting up of joint border markets, economic free zones, and new border openings”, is raising hackles in certain quarters, The US Department of State has been warning Pakistan about trade with Iran, to the extent of sanctions that are designed for putting an end to political and economic relations with Iran. Hence a ‘free market economy’ is not really a free market economy, but hinged on dictates of those in power. No doubt, the idiom ‘might is right,’ is based on such show of political and military strength, often used by imperialist forces.
It is noteworthy that Pakistan’s merchandise exports to United States has come down by 10.14 percent to $3.63 billion in the first eight months of the current fiscal year from $4.04 billion over the corresponding period last year. At the same time, Pakistan’s exports to China increased by 42 percent; it has increased to $1.895 billion in July-February FY24 from $1.334 billion over the corresponding period last year.
According to Punjab Livestock Secretary, Masaud Anwar, Pakistan has come to terms with China for exporting dairy products to China through a state-of-the-art farm developed in Sheikhupura.
In short, there is a continued shift in Pakistan’s trade pattern, where it is now trading more and more within the region; whether this trend will continue in the long term is yet to be determined.
At the same time, the role of the Special Investment Facilitation Council (SIFC) in attracting investors to Pakistan remains central. Investors from UAE, Saudi Arabia continue to be in dialogue with Ministry for Finance and Revenue. At the same time, there is also invitation to Australia and France for investing in the country.
Climate Imperialism?
There is no doubt that Pakistan is facing diabolical damages based on climate change. Though the government bureaucracy is accepting the fact, and at least making speeches for addressing the issue, the context of putting the blame for this havoc on western industrialized nations carbon emissions seems to be lacking. According to the Sindh Chief Minister Syed Murad Ali Shah, climate change impact was emerging in shape of water scarcity and could be addressed through introducing new cropping patterns that includes low delta crops aimed at reducing water consumption and increasing efficiency in agriculture. Mitigations could also be carried out by introducing agricultural water conservation practices that could also include drip irrigation, sprinkle system, dry farming, conservation tillage and other methods.
Given the extreme dearth of water resources in the country, it is worth pointing out that Coca-Cola, a corporation that faces not only boycott but is also responsible for using up extensive water reserves has invested $22 million in the beverage sector, specifically in technology upgrade, capacity enhancement of its export potential, and employment for over half a million local professionals along its chain.
In the end, the focus is on imported technology, and promotion of the same model of industrial development which is responsible for the catastrophic climate crisis. Our policy makers are blind to the rich source of local and indigenous knowledge embedded in our communities; the fact that the immense wealth generated by the agriculture sector is hinged on the immensely powerful productive force of small and landless farmers is totally ignored.
At the same time, the failure of government bureaucracy is abysmal. For instance, the Sindh Chief Secretary has acknowledged before the Sindh High Court that the timelines for implementation of Supreme Court-appointed water commission could not be met. There were still 769 points from where different departments had been releasing waste into freshwater bodies. Such negligence in context to water sources is criminal lack of accountability seems to be the order of the day.
After decades of pursuing a free-market economy the economic strength of the country, and social condition of the Pakistani population, especially rural communities, the low-income urban masses continues to deteriorate. There is no doubt that the austere economic policies dictated by the international financial organizations are for the benefit of corporations and investors, not for the people. What is the way out is a question which need to be asked and answers sought.
