Wheat Production in Pakistan: Saga of Policy Disincentives

This study probes into the interplay of the factors operating on supply side of the wheat economy of Pakistan. The analysis is carried out to determine the performance of the agricultural policy of the country in securing a sustainable measure of self-sufficiency in food production. It is argued that, compared to the developed countries, the developing countries like Pakistan have done too little and too late for their farm sector. The authors hold that the agricultural performance of the developing countries is directly affected by the high subsidies paid to the rich country farmers by their governments. The study attempts to determine the relationship of both wheat production and wheat productivity with the prices promised to the growers in Pakistan by government’s agricultural policy over the period 1966-2001. The results show that support price policy, adequate water availability and technology together helped enhance the wheat production of the country. The estimated coefficient showing the relationship between support price and wheat productivity, however, turns out to be insignificant. The analysis also incorporates the shocks in the economy that are independent of the usually normally-distributed random error. The results show that shocks are affecting both wheat production and wheat productivity. It is argued that achievement of the proclaimed objectives of the wheat support price policy in Pakistan has been constrained because of the incumbent governments ’ high political stakes, usually warranting protection of urban consumers and producers by keeping food prices low. The study concludes that wheat production is not some peripheral issue and the target of increasing both wheat production and wheat growers ’ income must be central to the macro management policy in Pakistan. Finally, the authors maintain that developing countries, while trusting the promise of freer trade in farm goods offered by the Doha Round, must remember the raw deal they got from the Uruguay Round