1.  Microeconomics 2Microeconomics 2
 Registration #: 2132163Registration #: 2132163
 Topic of Presentation: Production of wheatTopic of Presentation: Production of wheat
and its supply and demand in Pakistanand its supply and demand in Pakistan
 Presented by: Mohammad ZawarPresented by: Mohammad Zawar

2. Introduction:Introduction:
 Agriculture accounts for about one-fourth of Pakistan’s GDP. More than one-third ofAgriculture accounts for about one-fourth of Pakistan’s GDP. More than one-third of
cropped acreage is planted to wheat. Wheat is the staple food of people in Pakistan.cropped acreage is planted to wheat. Wheat is the staple food of people in Pakistan.
Depending upon the different growth rates of population, the wheat requirements varyDepending upon the different growth rates of population, the wheat requirements vary
from time to time that creates complications for policy makers’ .The main objective of thefrom time to time that creates complications for policy makers’ .The main objective of the
study was to forecast accurately the population and wheat requirements in Pakistan.study was to forecast accurately the population and wheat requirements in Pakistan.
 Pakistan is the 9th largest wheat producer country, accounting for 3.04 % of the world'sPakistan is the 9th largest wheat producer country, accounting for 3.04 % of the world's
wheat production from an area of 3.57 % of the world FOOD AND AGRICULTUREwheat production from an area of 3.57 % of the world FOOD AND AGRICULTURE
ORGANIZATON (FAO) Wheat is the leading food grain of Pakistan and being staple dietORGANIZATON (FAO) Wheat is the leading food grain of Pakistan and being staple diet
of the people. It occupies a central position in formulation of agricultural policies. Itof the people. It occupies a central position in formulation of agricultural policies. It
contributes 14.4 percent to the value added in agriculture and 3.1 percent to GDP.contributes 14.4 percent to the value added in agriculture and 3.1 percent to GDP.
 Planning is fundamentally a process of thinking ahead and anticipating difficulties throughPlanning is fundamentally a process of thinking ahead and anticipating difficulties through
rational actions based on experience, prudence and imagination to conduct the course ofrational actions based on experience, prudence and imagination to conduct the course of
development so as to realize the pet and professed goals. The long-term supplydevelopment so as to realize the pet and professed goals. The long-term supply
projections of agricultural commodities prove helpful for formulating government policiesprojections of agricultural commodities prove helpful for formulating government policies
with regard to production, consumption, prices, procurement, marketing, storage andwith regard to production, consumption, prices, procurement, marketing, storage and
domestic and foreign trade. There is no second opinion on the importance of Agriculturedomestic and foreign trade. There is no second opinion on the importance of Agriculture
for its being key numerator in the sustainable growth and development of the economy offor its being key numerator in the sustainable growth and development of the economy of
Pakistan. It is a vital sector, providing food to the fast-growing population of the country.Pakistan. It is a vital sector, providing food to the fast-growing population of the country.

3.  Punjab excelled in wheat production last year. The officials concerned conceded that inPunjab excelled in wheat production last year. The officials concerned conceded that in
southern Punjab crop output averaged between 30 and 60 mounds per acre. Punjab is thesouthern Punjab crop output averaged between 30 and 60 mounds per acre. Punjab is the
main wheat producer in Pakistan.main wheat producer in Pakistan.
 In Pakistan More than eighty percent of the people consume wheat as their necessary foodIn Pakistan More than eighty percent of the people consume wheat as their necessary food
ingredient. More than forty percent of the cropped area falls under wheat every year.ingredient. More than forty percent of the cropped area falls under wheat every year.
 Pakistan has faced many times the shortage of wheat, except leaving the era of “GREENPakistan has faced many times the shortage of wheat, except leaving the era of “GREEN
REVOLUTION”. Some shortages are faced by Pakistan through bad policies of governmentREVOLUTION”. Some shortages are faced by Pakistan through bad policies of government
and some are faced due to natural disaster but sometimes Pakistan has the surplus amountand some are faced due to natural disaster but sometimes Pakistan has the surplus amount
of wheat and the surplus amount of wheat usually gone for exports.of wheat and the surplus amount of wheat usually gone for exports.
 provinces (Baluchistan, Khber Phaktoon Khua and Sindh). Punjab produces more then theprovinces (Baluchistan, Khber Phaktoon Khua and Sindh). Punjab produces more then the
all other province because of the agriculture land. And the land is distributed in to two types,all other province because of the agriculture land. And the land is distributed in to two types,
 85% of wheat production takes place under irrigation system (Tube wells, Canals)85% of wheat production takes place under irrigation system (Tube wells, Canals)
 15% of wheat production takes place under (rainfed barani) areas.15% of wheat production takes place under (rainfed barani) areas.
Literature Review:Literature Review:

4.  In Pakistan the production of wheat mostly remains high in many eras but due toIn Pakistan the production of wheat mostly remains high in many eras but due to
improper policies of previous government Pakistan faced the shortage of wheatimproper policies of previous government Pakistan faced the shortage of wheat
like in the era of General Pervez Musharaf, the production of wheat was inlike in the era of General Pervez Musharaf, the production of wheat was in
surplus, when they completed the domestic demand the remaining quantity wassurplus, when they completed the domestic demand the remaining quantity was
exported by the orders of Shouqat Aziz the P.M. When they exported theexported by the orders of Shouqat Aziz the P.M. When they exported the
remaining quantity, suddenly Pakistan faced the wheat crisis, so they imported theremaining quantity, suddenly Pakistan faced the wheat crisis, so they imported the
quantity to fulfill the domestic demand. Pakistan should never face the shortage ofquantity to fulfill the domestic demand. Pakistan should never face the shortage of
wheat the one reason behind this is that Pakistan is the 9th largest wheatwheat the one reason behind this is that Pakistan is the 9th largest wheat
producing country. Some of the previous governments took serious steps in orderproducing country. Some of the previous governments took serious steps in order
to increase the supply of wheat. Like the land reforms in the government ofto increase the supply of wheat. Like the land reforms in the government of
Zulfiqar Ali Bhutto and General Zia-ul-Haq. The idea of the land reforms was givenZulfiqar Ali Bhutto and General Zia-ul-Haq. The idea of the land reforms was given
by Zulfiqar Ali Bhutto and was later implemented by General Zia-ul-Haq.by Zulfiqar Ali Bhutto and was later implemented by General Zia-ul-Haq.
 Saboor (2003) conducted a time series analysis for wheat supply projection inSaboor (2003) conducted a time series analysis for wheat supply projection in
Pakistan and concluded that it appears that total cultivated area increased due toPakistan and concluded that it appears that total cultivated area increased due to
changes in cropping pattern, higher cropping intensity, increased demand fromchanges in cropping pattern, higher cropping intensity, increased demand from
the industry, better marketing facilities and varying efforts of the government tothe industry, better marketing facilities and varying efforts of the government to
promote agricultural production. Similarly, the analysis of the past yield trendspromote agricultural production. Similarly, the analysis of the past yield trends
indicated that there had not been a significant break through in the average yieldindicated that there had not been a significant break through in the average yield
per hectare. However, a rising trend in yield during some period was due to theper hectare. However, a rising trend in yield during some period was due to the
use of improved varieties of wheat, increased water supply through installation ofuse of improved varieties of wheat, increased water supply through installation of
tube wells, increased use of fertilizers and plant protection measures.tube wells, increased use of fertilizers and plant protection measures.

5. The following table shows the wheat’s production area inThe following table shows the wheat’s production area in
ProvincesProvinces
ProvinceProvince Area (Million Hectares)Area (Million Hectares) Percentage of totalPercentage of total
areaarea
PunjabPunjab 6.6356.635 7676
SindhSindh 1.0591.059 1212
KPKKPK 0.7300.730 88
BalochistanBalochistan 0.3400.340 44
TotalTotal 8.6658.665 100100

6. Production:Production:
 Wheat is the main Pakistani dietary staple and the Government of Pakistan (GOP)Wheat is the main Pakistani dietary staple and the Government of Pakistan (GOP)
considers it the key strategic commodity as 80 percent of farmers–45 percent of theconsiders it the key strategic commodity as 80 percent of farmers–45 percent of the
total population– depend on it for their livelihood, as a result, it’s the basis of thetotal population– depend on it for their livelihood, as a result, it’s the basis of the
country’s food security. Consequently, the GOP’s agricultural policy is heavilycountry’s food security. Consequently, the GOP’s agricultural policy is heavily
centered on wheat through price support programs and export interventions. Incentered on wheat through price support programs and export interventions. In
MY2013/14 wheat production is forecast at 24.0 million tons, in MY2011/12 theMY2013/14 wheat production is forecast at 24.0 million tons, in MY2011/12 the
wheat production projection was 25 million tons but failed to achieved the target andwheat production projection was 25 million tons but failed to achieved the target and
the production remains at 21 million (est.).the production remains at 21 million (est.).
 In 1980s the government introduce the procurement price at that time the price wasIn 1980s the government introduce the procurement price at that time the price was
set at Rs. 2.15/kg in order to increase the productivity of wheat.set at Rs. 2.15/kg in order to increase the productivity of wheat.
 The Government of Pakistan (GOP) raised the procurement price 14 percent for theThe Government of Pakistan (GOP) raised the procurement price 14 percent for the
current year’s crop from Rs.1050 per 40 kg ($292/ton) to Rs.1200 per 40 Kgcurrent year’s crop from Rs.1050 per 40 kg ($292/ton) to Rs.1200 per 40 Kg
($312/ton), although farmers’ organizations maintain that the increase is not($312/ton), although farmers’ organizations maintain that the increase is not
sufficient. An additional 5,000 hectares will be cultivated from last year’s total area ofsufficient. An additional 5,000 hectares will be cultivated from last year’s total area of
8.66 million hectares.8.66 million hectares.

7. Steps taken by different governments to increase the productivity ofSteps taken by different governments to increase the productivity of
WheatWheat
 Land Reforms of 1959 & 1972Land Reforms of 1959 & 1972
What are the land reforms and why government implement it?What are the land reforms and why government implement it?

TheThe land reforms means distribution of land among the tenants and taking the land fromland reforms means distribution of land among the tenants and taking the land from
those who do not cultivate it, to small farmers (who wants to cultivate the lands but don’tthose who do not cultivate it, to small farmers (who wants to cultivate the lands but don’t
have lands).have lands).
 Features of land reforms 1959 & presented by Ayub khan:Features of land reforms 1959 & presented by Ayub khan:
 Ceiling of landholdings 500 acres irrigated land, and 1000 acres unirrigated, or landCeiling of landholdings 500 acres irrigated land, and 1000 acres unirrigated, or land
allowed to bring landholdings of 36,000 produce index units (PIUs).allowed to bring landholdings of 36,000 produce index units (PIUs).
 Resumed land first to be sold to tenants and then to small farmers.Resumed land first to be sold to tenants and then to small farmers.
 Abolition of Jagirs.Abolition of Jagirs.
 Features of land reforms 1972 & presented by Zulfiqar Ali bhutto:Features of land reforms 1972 & presented by Zulfiqar Ali bhutto:
 150 acres of irrigated land, and 300 acres of unirrigated land, or 12,000 produce index150 acres of irrigated land, and 300 acres of unirrigated land, or 12,000 produce index
unitsunits
 No compensation to land owners.No compensation to land owners.
 Land revenue, water rates, and seeds costs carried by land owners and cost of fertilizersLand revenue, water rates, and seeds costs carried by land owners and cost of fertilizers
and pesticides to be share equally.and pesticides to be share equally.

8. Green revolution’s impact on wheat production in Pakistan
 Green revolution was introduce world wide and it had great impact on the
productivity of agriculture products.
 Pakistan also took some benefits from this technology.
 Regarding the wheat production, before the green revolution the formers uses the
old pattern of cultivation.
 After using the green revolution patterns formers increases the productivity on the
same land in less time and in very efficient way.
 Green revolution includes, High yielding verities of seeds HYVs, tractors, tube
wells, fertilizers, pesticides.
 In the 1960s the HYV of seeds of wheat, developed by international wheat and
maize institute in Mexico. These seeds were experimented in the same year.
 The impact of these seeds was that the wheat production increased by 91%.

9. The Contribution of wheat in GDPThe Contribution of wheat in GDP
3.1%
53%
26%
14.4%%
Wheat
live stock,s
Other Major and Mino
Crops
wheats contribution in
Value added

10. Years Production in Tons
1991 14565
1992 15684
1993 16157
1994 15212
1995 17002
1996 16651
1997 18694
1998 17858
1999 21079
2000 19024
2001 18227

11. 2002 18227
2003 19183
2004 19500
2005 21612
2006 21277
2007 23295
2008 20959
2009 24000
2010 23900
2011 25000
2012 21 million

12. 0
5000
10000
15000
20000
25000
30000 1960
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Years
MTMetricTon
Wheat production in
Pakisatn

13. Exports of wheatExports of wheat
 The table shows the export ofThe table shows the export of
wheat to countrieswheat to countries
CountryCountry Quantity in TonsQuantity in Tons
AfghanistanAfghanistan 500,000500,000
SrilankaSrilanka 200,000200,000
UAE, Qatar, OmanUAE, Qatar, Oman 40,00040,000
East Africa (Sudan,East Africa (Sudan,
Yemen, Kenya)Yemen, Kenya)
30,00030,000
BangladeshBangladesh 30,00030,000
TotalTotal 800,000800,000

14. Supply and Demand in PakistanSupply and Demand in Pakistan ::
 MY 2013/14 wheat production is forecast at 24 million tons to feed 180.3 million people.
 According to the data of year 2012 the country’s total wheat demand is projected at around 22According to the data of year 2012 the country’s total wheat demand is projected at around 22
million tons to feed 180 million people. Market players insist that Pakistan also caters to themillion tons to feed 180 million people. Market players insist that Pakistan also caters to the
needs of an additional 1 million Pashtoons living across Torkhum border in Afghanistan. Soneeds of an additional 1 million Pashtoons living across Torkhum border in Afghanistan. So
the actual demand comes to about 23 million tons. This will lead to increase in the price ofthe actual demand comes to about 23 million tons. This will lead to increase in the price of
wheat per 40 kg.wheat per 40 kg.
 According to the data of year 2000 the projected supply for seed, feed and waste, 16.0 millionAccording to the data of year 2000 the projected supply for seed, feed and waste, 16.0 million
tons are available for domestic consumption versus a demand, of 19.1 million tons. This gaptons are available for domestic consumption versus a demand, of 19.1 million tons. This gap
could be closed through trade or price increase.could be closed through trade or price increase.
 The total wheat supply this year inclusive of carry over stocks of three million tons from lastThe total wheat supply this year inclusive of carry over stocks of three million tons from last
year is expected to be about 2.5 million tons.year is expected to be about 2.5 million tons.
 Chaudhry Mohammad yousuf, Chairman Pakistan Floor Mills Association was also not tooChaudhry Mohammad yousuf, Chairman Pakistan Floor Mills Association was also not too
enthusiastic. “I do not see wheat price rising in the near future”, he said confirmingenthusiastic. “I do not see wheat price rising in the near future”, he said confirming
comfortable demand and supply situation.comfortable demand and supply situation.

15. Hurdles that disturbs the market forces in PakistanHurdles that disturbs the market forces in Pakistan
(Regarding Wheat)(Regarding Wheat)
 Natural Disasters (Floods, Earthquakes)Natural Disasters (Floods, Earthquakes)
 Broker (Middle man) Should by eliminated.Broker (Middle man) Should by eliminated.
 The government policies should be implemented instead of just keeping on paperThe government policies should be implemented instead of just keeping on paper
workwork
 Refuges should be eliminatedRefuges should be eliminated
 Smuggling of wheatSmuggling of wheat
 Fertilizers, High yielding verities of seeds (HYVs), Pesticides should be providedFertilizers, High yielding verities of seeds (HYVs), Pesticides should be provided
on timeon time
 Monopoly power and Hoardings should be eliminatedMonopoly power and Hoardings should be eliminated