Pakistan: Trouble Hits Wheat

Matt Hopkins Posted by Matt Hopkins|1 January 2008

Mistakenly high crop estimates, increased consumption, food inflation, and the lifting of the export ban lead to Pakistan wheat shortage despite a 2006 carryover of over 4 million tons (MT), according to the US Dept. of Agriculture’s Foreign Agriculture Service (USDA-FAS).

The Pakistani government’s estimate of a bumper crop of 23.5 MT — compared to an annual average of 21.5 MT — was maintained despite an increased crop area of just 1% over 2006, according to USDA-FAS. While growing conditions were favorable, most believe the crop is at least one million tons lower than the government estimate.

Motivated in part by expectations of a bumper crop, in April the government lifted the ban on wheat exports that was put into effect in 2003. With international wheat prices strong, exporters shipped out 500,000 tons of wheat before the government reinstated the export ban in late May. While farm prices in Pakistan increased as hoped, this also began to inflate food prices, which have now reached dangerous levels.