According to many agricultural economists, current food prices, coupled with their high volatility and long-term rising trend, speak loudly about Pakistan’s precarious food security situation. Continued financial insecurity and, as a result, dwindling agricultural subsidies, along with the adverse impact of climate change on crop yield, are causing an increasingly uncertain situation for food supplies in the country.
The government is supposed to ensure sustainable food availability in rural and urban markets at stable and affordable prices. However, in developing countries like Pakistan, which has limited financial resources, food security is a complex phenomenon involving several trade-offs.
Therefore, striking a balance between various development goals and protecting the interests of different groups is a daunting challenge.
With over 220 million people, Pakistan’s population growth rate is 1.9 per cent — far higher than the world’s average of 0.9pc (World Bank data).
Unfortunately, expansion in the country’s agricultural land could not match the population growth rate, primarily due to scarcity of water — a major limiting factor. In 1961, per capita arable land availability was 0.66 hectares, which has now drastically decreased to 0.14 hectares.
In 1961, per capita arable land availability was 0.66 hectares, which has now drastically decreased to 0.14 hectares while the population has increased
As a result, Pakistan has to rely primarily on increasing crop productivity (yield per acre) to feed its ever-increasing population. However, rising prices of agricultural inputs and the growing threat of climate change have made it really difficult to boost yields significantly.
Another viable option is to increase the area of wheat — Pakistan’s major staple food — by giving the farmers a higher support price. The arguments in favour include higher import parity prices of wheat due to excessive depreciation of Pak rupee, attaining self-sufficiency in wheat, saving foreign exchange, and enticing farmers to sow wheat who are inclined towards sowing oilseed crops, spring maize (corn), and sugarcane, as they are currently more remunerative.
However, a higher support price to the tune of Rs4,000 per 40kg, as announced by the Government of Sindh, recalls the past rice policy of Indonesia and the Philippines in the 2000s, where high prices were given to rice farmers to alleviate their poverty, whereas most of poor and hungry in these countries were net rice buyers, hence price increase affected them adversely.
Therefore, the government needs to strike a balance between expanding wheat production through higher support prices, alleviating poverty in the country, and allocating funds for safety nets to provide subsidised wheat flour to the poor. In addition, pro-poor economic growth and developing the agriculture sector are some other important objectives that must be taken into account.
Food price volatility (spikes and collapses) has become a critical issue in Pakistan. Even when average prices are affordable to the poor and provide sufficient incentives for farmers, price fluctuations pose risks and create a poverty trap for consumers as well as farmers.
Volatile food prices have detrimental effects on vulnerable households as they frequently exhaust their financial and human resources in times of food crises merely to survive. As a result, they can’t utilise their own resources and skills to come out of poverty. In this way, the volatility of food prices harms the poor in both the long and short term.
At the macro level, with stable food prices, the implementation of poverty alleviation programmes is simpler and less expensive. Conversely, due to unstable markets, policymakers have to go for short-term crisis management through diverting available financial resources to stabilise food prices and provide safety nets rather than implement development strategies and make strategic investments for economic growth and alleviation of poverty.
There have been some other developments going on at the global level that may have a deeper effect on the food security situation in Pakistan in the short as well as in the long term. Our policymakers should remain fully cognizant of such changes.
Climate change is affecting agricultural productivity in many parts of the world. In India, below average monsoons in the eastern and northern parts have curtailed rice production in 2022. In China, this summer’s heat wave in the Yangtze River region and the resulting drought have decreased China’s rice output. The heat wave in March 2022 affected Pakistan’s wheat crop negatively. Europe faced the worst drought in 500 years, during the summer of 2022, due to record high temperatures and low rainfall.
Such adverse effects on agriculture are likely to drive volatility in global food prices, especially if some major producer opts for export restrictions, as India imposed restrictions on wheat, sugar and rice exports in 2022.
Several countries are undergoing a dietary transformation as their average income is rising rapidly. The proportion of starchy staples (wheat, rice, maize) in the diet is decreasing in favour of animal protein.
Furthermore, the diet in these countries is becoming more “westernised” with greater use of cookies, cakes, bread, buns and noodles. The trend is encouraging wheat consumption while decreasing rice’s share in the diet. In the future, it may cause an increase in global wheat prices.
Increasing consumption of animal products requires greater quantities of livestock and poultry feed. Therefore, across the globe, larger land areas are increasingly being used for feed ingredients such as soybeans, maize, and canola, which would ultimately reduce the area of wheat and rice. Even in Pakistan, maize production increased from 4.92 to 8.9 million tonnes in just the last five years (2016-2021).
Biofuel (derived from agricultural produce like maize, sugarcane, cassava, or vegetable oils) is a substitute for gasoline and diesel, but currently, its production is not feasible. However, if oil prices rise to the point where biofuel production is justified in terms of cost, it would turn out to be a major disruptor in the agriculture and food sector.
Already, more than ten countries, including the US, Brazil, Germany and France, have significant production, collectively producing 1.747m barrels per day. At some point in time, if the US and Europe allow the use of food crops to produce biofuel to reduce emissions of greenhouse gases in order to mitigate climate change, poor consumers of several countries, including Pakistan, would be at serious risk.
All the above mentioned developments reveal that in the future, food security will no longer be an agricultural issue but a trade and macroeconomic challenge that needs to be addressed by a comprehensive policy encompassing agriculture, international trade, economic development, and poverty alleviation. In addition, whenever fiscal spaceis available, Pakistan should build up its reserves of wheat, rice, and maize to ensure food security and to stabilise food prices in the country.
Dawn, December 26th, 2022
