Wheat Support Price: A Note For Policy Makers

PIDE Knowledge Brief No. 18:2020

The Main Recommendation Has Been For A While And Remains True That The Government Should Withdraw From The Market. This Would Mean: (I) Start By Setting Indicative Pricing And Stand Back From Procurement; (Ii) Withdraw From Storage Over A Period Of 5 Years As Private Capacity Develops; (Iii) Over A Period Of 5 Years, In A Stepwise Fashion, Withdraw Import And Export Controls; (Iv) Liberalize Spot Markets To Allow Entry And Competition Through Dissolving Dc Led Markets; & (V) Develop Rules And Standards For Commodity (Forward And Futures) Markets In Key Areas As Storage Develops. This Will Mean Strengthening The Karachi Exchange Or Develop Rules For Local Exchanges. The Government Can Solve This Issue Through Proactive Market Development Policies. However, The Time Has Come To Withdraw From The System Of Government Involvement In Procurement And Prices. It Has Led To Repeated Shortages And Excesses As Well As Fiscal Costs. The International Market Can Readily Supply Wheat At Short Notice. With The Market In Place, The Probability Of A Shortage Will Be Minimal. Like Every Other County, The Government Will Monitor And Remain Ready To Intervene In Extreme Circumstances.