Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options

This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on overall price levels. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs.Wheat; Agricultural prices; Pakistan

Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options

This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on the overall consumer price index. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs.Food Policy, Food Price Stabilisation, Agricultural Policy, Food Price Inflation

Implications of quality deterioration for public foodgrain stock management and consumers in Bangladesh

In the late 1990s, government policy in Bangladesh shifted in favor of increased public foodgrain stocks, setting official minimum stock targets of 1.0 to 1.2 million tons, as compared to operational targets of about 700 to 800 thousand metric tons in the early 1990s. Because no mechanism for stock rotation involving simultaneous buying and selling grain at a wholesale level exists, higher stock levels with no increase in distribution led to an increase in average age of stocks and problems of stock quality deterioration. This paper extends earlier analyses of stock policy by focusing on a key aspect of stock management in Bangladesh: the economic costs of stock quality deterioration in storage, including the implicit costs to recipients of Public Food Distribution System (PFDS) foodgrain. Using market prices to value procurement and distribution of rice and wheat, consumer and producer subsidies accounted for 57.4 and 20.9 percent, respectively, of net outlay in 2000/01. Implicit losses to rice consumers due to quality deterioration were significant in 2000/01: about 1.05 billion Taka (about 19 million dollars), equal to 10.9 percent of total net outlay on rice of the PFDS. Analysis of the costs and benefits of alternative stock targets based on calculations of the minimum age of stock on a monthly basis indicates that moderate increases in the size of stock (e.g. 200 thousand tons), lead to only small net marginal outlays. However, unless procurement and distribution are also raised, the age and quality of the stock for distribution deteriorates, resulting in significant losses to program recipients.Grain production ,Bangladesh ,Food supply ,

Social Accounting Matrix for Pakistan, 2001-02: Methodology and Results

This paper describes the structure and construction of a social accounting matrix (SAM) for Pakistan for 2001-02. A SAM is an internally consistent extended set of national accounts that disaggregates value-added in each production activity into payments to various factors (e.g., land, labour, capital), and disaggregates household incomes and expenditures according to various household types. Because this Pakistan SAM is designed for analysis of the links between growth and rural poverty, agricultural activities, agricultural factors of production, and rural household accounts are more disaggregated than are those for urban activities and households. Rural household groups in the SAM are split according to three regions (Punjab, Sindh, and Other Pakistan) to capture the large differences in the structure of agricultural production and incomes across Pakistan. On average, household incomes in the SAM are 2.1 times greater than household expenditures in the HIES Survey, reflecting the apparent substantial under-reporting of expenditures (particularly on services)and informal sector incomes in the HIES and other household surveys. Agricultural factor incomes as calculated in the SAM account for only 23 percent of total factor incomes in Pakistan, but 60 percent of total factor incomes for agricultural households. 91 percent of agricultural incomes derive from land, water, own-farm labour, or livestock; earnings of hired labour and (nonlivestock)agricultural capital account for only 9 percent of agricultural incomes. Incomes of large- and medium-farm rural households, calculated using land area cultivated, data from the Agricultural Census, and other data, are significantly higher than indicated in household surveys.National accounts; Social accounting matrix

In-kind transfers and household food consumption

This paper examines the impact of wheat transfers and cash incomes on wheat consumption and wheat markets. Using propensity score- matching techniques, the total marginal propensity to consume (MPC) for wheat is, on average, 0.33, ranging from essentially zero for Food For Work (a program with large transfers) to 0.51 for Food For Education. Econometric estimates indicate that the MPC for small wheat transfers to poor households is approximately 0.25, while the MPC for wheat out of cash income is near zero. This increase in demand for wheat reduces the potential price effect of three major targeted programs involving small rations (Food For Education, Vulnerable Group Development, and Vulnerable Group Feeding) by about one-third.Transfer payments. ,Incomes. ,Wheat. ,Wheat Economic aspects Bangladesh. ,Food consumption. ,Cereal crops. ,Education. ,Labor. ,Access to education. ,

Rehabilitating agriculture and promoting food security following the 2010 Pakistan floods: Insights from South Asian experience

The recent floods in Pakistan have had a devastating effect on the Pakistani population. The Office for the Coordination of Humanitarian Affairs (OCHA 2010) estimates that, as of early September 2010, more than 20 million people had been displaced by the flood and by some estimates the damage to crops, housing, other buildings, roads, and irrigation infrastructure now reaches $6.5 billion (OCHA 2010).* Recovery experiences from previous natural disasters in Pakistan and throughout South Asia, especially the 2005 earthquake in Pakistan and the 1998 flood in Bangladesh, suggest lessons in four broad areas that are relevant for recovery efforts following the 2010 Pakistan flood. First, market and trade policies should be clear, transparent, and consistent, maintaining adequate price incentives so that private trade and imports can contribute to postdisaster recovery. Restoration of private trade (and even promotion of expansion of trade) can enhance both price stability and food security more effectively and at far less cost than otherwise, particularly in the rehabilitation phase. Recovery experiences from previous natural disasters in Pakistan and throughout South Asia, especially the 2005 earthquake in Pakistan and the 1998 flood in Bangladesh, suggest lessons in four broad areas that are relevant for recovery efforts following the 2010 Pakistan flood. Second, there is a need for a strong institutional framework to coordinate the large-scale disaster response. Long-term and short-term goals need to be accounted for and integrated into a comprehensive postdisaster response framework. Involvement of all affected stakeholders in the policy formulation is important to ensure representation and participation. Third, recovery efforts should also include support for livelihood security and restoration and ensure inclusion of the stakeholders. In the immediate aftermath of the floods, a provision of compensation based on loss of livelihoods might be necessary to assist affected groups. Alternative strategies for the poor to cope with the loss of income need to be examined (including credit provision) so as to avoid high and unsustainable household indebtedness. Fourth, evaluation of previously implemented projects suggests that focus on not only restoring infrastructure facilities but also upgrading them can lead to enhanced flood resistance as well as a reduction in future disaster loss. In addition, the resumption of normal agricultural activities as soon as possible is vital for the country's recovery. The provision of inputs to affected smallholders is necessary for the resumption of normal livelihood activities. The 2010 Pakistan National Disaster Response Plan incorporates some of these lessons learned from earlier disasters. However, despite the establishment of national and sub-national disaster management authorities, significant challenges to the functioning of this system still remain. Two alternative institutions present themselves as possible vehicles for the delivery of poverty-alleviating interventions and resources—the Pakistan Poverty Alleviation Fund (PPAF) and the Benazir Income Support Programme (BISP). PPAF uses a participatory and community-based model and comprises a network of more than 130,000 community organizations and groups in 127 districts covering 30,000 villages. This large and established network puts PPAF in a convenient position to reach affected communities in a timely and efficient manner. BISP has a partnership with the National Database and Registration Authority (NADRA) that is being used to provide necessary financial support to flood victims throughout the country. However, there are several obstacles to the successful disbursement of funds through BISP. In particular, because a large percentage of displaced people do not possess computerized national identity cards, these people could be excluded from the income support programs unless a new comprehensive listing is done. Finally, it is important to establish and strengthen disaster response capability so that the country can better respond to recurring natural disasters. Emergency early warning system mechanisms have the potential to substantially reduce casualties and economic losses from disasters, and they need to be strengthened. Likewise, the lessons learned from the relief and rehabilitation response to the 2010 floods should be incorporated in contingency plans for future natural disasters.floods, lessons learned, postdisaster recovery and rehabilitation,

In-kind transfers and household food consumption

This paper examines the impact of wheat transfers and cash incomes on wheat consumption and wheat markets. Using propensity score- matching techniques, the total marginal propensity to consume (MPC) for wheat is, on average, 0.33, ranging from essentially zero for Food For Work (a program with large transfers) to 0.51 for Food For Education. Econometric estimates indicate that the MPC for small wheat transfers to poor households is approximately 0.25, while the MPC for wheat out of cash income is near zero. This increase in demand for wheat reduces the potential price effect of three major targeted programs involving small rations (Food For Education, Vulnerable Group Development, and Vulnerable Group Feeding) by about one-third.Transfer payments. ,Incomes. ,Wheat. ,Wheat Economic aspects Bangladesh. ,Food consumption. ,Cereal crops. ,Education. ,Labor. ,Access to education. ,

Regional Trade and Food Price Stablisation in South Asia: Policy Responses to the 2007-08 World Price Shocks

World price shocks and disruptions in international cereal trade in 2007 and 2008 caused considerable anxiety and hardship for food importing countries throughout the world. In South Asia, Pakistan, Afghanistan, Bangladesh and India were all affected by these movements in international prices, though the effects on domestic prices in each case was mitigated or exacerbated by each country’s own trade policies, as well as the trade policies of its neighbours. This paper reviews domestic and international trade policies in South Asia in recent years and argues that liberalised international trade still provides the best mechanism for stabilising prices and food supplies in most years. Nonetheless, appropriate contingency policies still are needed for years in which international prices are extraordinarily high. More explicit commitments to cereal trade liberalisation within South Asia would also promote region-wide food security and help avoid a repetition of export supply disruptions by India that contributed to sharp rises in food prices in Bangladesh, and similar restrictions by Pakistan that contributed to food price increases in Afghanistan.Food Security, Price Stabilisation, Trade Policy, Food Stocks, South Asia

Evaluating alternative policy responses to higher world food prices: The case of increasing rice prices in Madagascar

"Higher world food prices have led many governments in developing countries to adopt policy measures to mitigate the adverse impact on low-income households. This paper sets out a partial equilibrium framework to evaluate the relative efficiency, distributional, and revenue implications of alternative policy responses. The model is applied to Madagascar data to evaluate the net welfare impact of reductions in rice tariffs and to compare this to the alternative policy of targeted transfers. Lowering tariffs is not a cost-effective approach to protecting low-income households due to substantial leakage of benefits to higher income households and an adverse impact on poor net rice producers even when the substantial efficiency gains from such tariff reductions are incorporated into the analysis. Developing a system of well-designed and -implemented targeted direct transfers to poor households is thus likely to be a substantially more cost-effective approach to poverty alleviation, especially if these can be linked to productivity-enhancing investments. Such an approach should be financed by switching revenue raising from rice tariffs to more efficient tax instruments. These policy conclusions are likely to be robust to the incorporation of general equilibrium considerations." from Author's Abstractrice, Import tariffs, Targeted transfers, Welfare impacts, Globalization, Markets, Food prices,

Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options

This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on overall price levels. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costsWheat, Agricultural prices, Pakistan