EconomyPakistan

Is the Wheat Import Scandal in Pakistan More Political Than Economic?

The recent uproar over the alleged wheat import scam in Pakistan has taken a new twist. The government-appointed committee has started interviewing officials to identify those responsible for authorizing wheat imports in anticipation of shortages. However, the outcry seems to be more politically driven than economically motivated, suggesting that the federal government needs to devise strategies to manage the country’s expected wheat surplus.

The farmers in Punjab are particularly affected by the ineffective governance structure of the agricultural department. The import of 3.612 million tonnes of wheat in FY24 may not be a major concern, but the crux of the matter lies in improving the reporting mechanisms for wheat production and consumption in provincial agriculture departments and the Federal Ministry of Food Security.

The committee is also tasked with investigating whether the minimum support price of Rs4,000 per 40 kg at the sowing stage was determined properly or arbitrarily on someone’s instructions. Many analysts argue that the government is diverting people’s attention away from the underlying issue by forming committees to investigate private-sector-led imports that received no government subsidies.

The first fact-finding committee confirmed that wheat imports met government permission. However, the government removed the Ministry of Food Security secretary and the Plant Protection Department director general before the investigative committee report to show Punjab farmers that the federal government cares.

On Saturday, Prime Minister Shehbaz Sharif held a meeting in Lahore to consider the issue and form a new committee while his elder brother Nawaz Sharif requested a National Accountability Bureau inquiry. The question arises: why are farmers in Punjab protesting alone? Wheat imports are not confined to Punjab; private firms in Karachi also imported the wheat.

There are two interpretations: Sindh harvesting was completed before March, and the provincial government fulfilled its commitment to purchase wheat from farmers at the agreed-upon price of Rs4,000 per 40kg. Then it begs whether the wheat issue is being addressed appropriately in Punjab.

The number one wheat importer is Trading Louis Dreyfus, a French commodities and grain company with an office in Karachi and an eight-day shipping time. This company bought 849,448 tonnes of wheat, accounting for 24pc of total wheat imports. United Resources Corporations is the second largest importer, accounting for 520,442 tonnes and 15pc of total private sector imports in FY24. There are 65 total wheat importers, 17 of which are flour mills that also import wheat. The plant protection agency is estimated to have issued approximately 1,000 permits to these importers.

Prime Minister Shehbaz Sharif has pledged full transparency regarding the wheat import scandal, affirming that the government will disclose all findings to the public. The farmers in Punjab, the country’s largest province and often called the “bread basket” of Pakistan, are demanding that the government stop wheat imports that have flooded the market at a time when they expect bumper crops. Pakistan has spent one billion US dollars on wheat imports in the first nine months of the current financial year. Wheat imports are expected to rise for key importing countries including Pakistan, according to the World Bank.

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