During a discussion on the floor of the Punjab Assembly regarding the atta (wheat flour) crisis, a member of the ruling PML(N) proposed his own novel solution to the chronic shortage that had gripped the whole country. He suggested that if atta was not available, people should cut down their consumption and instead eat rice! The member was obviously innocent of all acquaintance with history. Otherwise he would have known the infamous quote from France's Queen, Marie Antoinette, when she pronounced that if the people of France could not afford bread, let them eat cake. Marie Antoinette subsequently lost her head (literally) in the French Revolution. Such a fate may not overtake the honourable MPA of the ruling party, but he stands forewarned!

The atta crisis has brought into sharp relief the mountain of anomalies that surround the production, import, stocking, distribution and consumption of the staple item of the people's diet. The received wisdom in days long gone was that the fate of governments was intrinsically tied to their management of the food needs of the populace, particularly atta. However, that traditional wisdom has been thrown out of the window by the steady and incremental increase in the price of this commodity over the years, and the new wisdom confirmed by the current crisis. As far as can be gathered, the crisis took the government by surprise. Their reactions to it, therefore, had a touch of panic to them, punctuated by some comic relief.

In early March, the government had with fanfare announced the lifting of the ban on inter-provincial movement of wheat. Prime Minister Nawaz Sharif justified the measure by saying that the people of the rest of the country had an equal right to the wheat produced by Punjab. But the situation on the ground was very different from the stated perception of the Prime Minister. In the three weeks to the end of March, wheat is reported to have been smuggled out of the country in enormous quantities. The resulting shortages forced the government to reimpose the ban on inter-provincial movement of wheat on March 27. But by then it was too late. The crisis had acquired a dynamic of its own, one which did not easily yield to the measures taken by the government to control the situation. Between the smugglers, flour mill owners, wholesalers and retailers (the latter three engorging themselves on hoarding and blackmarketing), the hapless and helpless people of Pakistan were left scratching around for a piece of bread.

Most of the flour mill owners are said to be supporters of the ruling PML(N). In NWFP, most of them belong to, or support, the ANP, the PML(N)'s coalition partner. If this is an example of what the business community can do to make windfall profits from the misery of the masses, it is difficult to imagine this community, on which the Prime Minister's economic recovery programme critically depends, coming forward and honestly paying their taxes. Federal Food and Agricultural Minister Abida Hussain was hard put to it to explain away the crisis. Her attempt to shift the blame entirely onto the shoulders of the government of Benazir Bhutto and a so-called 'sensationalist' press, did not wash with the crowds lining up to get a morsel of bread for their families. Food riots were witnessed on a scale never before known in Looting took place in certain instances. Prices of scarce atta in the retail markets ballooned to Rs per kg. The government's ill-starred attempt to circumvent the market in the midst of the crisis and distribute atta directly to the consumers through special bazaars turned into a fiasco and may have been directly responsible for some of the looting and rioting by desperate people.

The current atta crisis needs to be understood in terms of the entire structure of wheat procurement and distribution. Pakistan needs 19 million tonnes of wheat every year. Part of this is consumed for poultry feed and smuggled to neighbouring countries where the price is higher than in It is estimated that these two 'uses' eat up 2 million tonnes a year (with the bulk of this being 'consumed' by smuggling). Wheat is procured from two sources: the domestic crop and imports. Domestic production currently hovers around 16-16.5 million tonnes a year. The shortfall of 2.5 million tonnes is met from imports. This deficit in wheat domestically produced against the requirement has come about over the years because of a variety of factors. The area under wheat cultivation has been shrinking in favour of more lucrative cash crops. The total area did more than double between 1947-48 (3.95 million hectares) and 1994-95 (8.5 million hectares). But the burgeoning population has raised demand beyond the country's current output. An increase of only 0.3 per cent in the area under wheat cultivation is expected this year, with the particular danger of a declining wheat acreage in Sindh.

The government buys wheat from the farmer at a managed price, called the support price. This price was raised through an announcement at the Farmers Convention in Islamabad by the Prime Minister from Rs 185 per 40 kgs to Rs 240. Wheat would be issued to the flour mills as a result at Rs 260. The issue price implies a subsidy because the costs of transportation and other incidental expenses incurred to bring the wheat to storage sites adds Rs 40-60 to the procurement price. The subsidy is larger per kg on imported wheat, whose cost is higher. Until recently, the subsidy on imported wheat was borne entirely by the Federal government, while the subsidy on domestically produced wheat was shared by the Federal and provincial governments. Now the entire subsidy has to be borne by the provincial governments, irrespective of source. International lending agencies recommend the elimination of the subsidy and for the price to be brought on par with international prices (FOB the exporting country) or an 'import parity' price (landed cost plus transportation and other incidental expenses).

The landlords lobby too argues that the price should be fixed closer to the market price (around Rs 250-300) and be pegged to the international price in order to offer an incentive to the grower to switch to more wheat production. This lobby claims the cost of inputs has increased 25-30 per cent in recent months. The shortfall of wheat this year is estimated as being the highest ever, in the region of 2.3-3.0 million tonnes, which is 25-30 per cent up on last year. The wheat import bill this year will therefore be the highest ever. There certainly is weight therefore in the argument that our domestic farmers should be given the incentive to grow more wheat by pegging the domestic support price close to international prices. This would also save a great deal of scarce foreign exchange. But there are serious problems with pegging the price of domestically produced wheat to international prices, which are extremely volatile. Optimal import when the international price falls is only possible if adequate storages are available, something which has yet to be taken up seriously if buffer stocks are to be maintained for just such a crisis as the current one. The exchange rate of the rupee is also a factor in the cost of imports.

One practical proposal could be that the year to year international price being subject to enormous fluctuations, an average of 5-10 years FOB prices of the main exporting countries could be used as a benchmark. Any perceptible deviation of the domestic support price from that benchmark could then be corrected. Withdrawal of the subsidy though would remove the cushion against social unrest which the subsidy implies, particularly for the urban populace. Relatively cheap roti has been a major factor in keeping the otherwise deprived people of Pakistan quiescent under our inequitable social order. Any government which raises the price of roti invites opprobrium and worse. Staple items of the diet of a people can be the most explosive issue to handle if their price rises beyond the affordability of the masses. Price rise in atta has a multiplier effect on the general price line. It is unlikely that the price rise that has taken place during the current crisis will be reversed in a hurry, if at all. That spells an inflationary spiral which may derail some of the economic calculations of the government.

The advocates of the free market argue that the whole edifice of support prices/subsidised issue of wheat should be incrementally done away with in order to leave the price of wheat to be determined by market forces. The government's role, they argue, should be steadily reduced to storage, building buffer stocks and serving the needs of far flung areas not serviced by the market. The support price, they further assert, should be retained only as a minimum guaranteed price to protect the small farmer from the depredations of the private sector which may try to squeeze him (the example of sugar cane growers reduced to the mercy of the crushing mill owners is a case in point). But what these free marketeers ignore is the fact that, as this current crisis has shown, if left to the private sector, there is no guarantee that Pakistan's wheat would not be quickly smuggled out to neighbouring countries with higher prices, leaving us helpless.

Wheat yields in Pakistan are abysmally low. One estimate has it that we enjoy no more than one third the yields in Indian East Punjab. In our Punjab, the average yield in recent years has been 1,950-2,200 kg per hectare. In Sindh it has declined from 2,259 kgs per hectare in 1988-89 to 1,914 kgs per hectare in 1993-94. In barani areas, because of the scarcity of irrigation water, it is the lowest. NWFP, relying largely on barani cultivation, therefore has the lowest yield, averaging 1,300 kgs per hectare. The national average, achieved only in recent years, is a little over 1,900 kgs per hectare. Wheat production is highly dependent on inputs, which are only satisfactorily available to 15 per cent of growers, being the large landholders with political clout. Water in particular is a critical input, whose inequitable distribution and hindrances in timely availability militate against the smaller farmer.

Absentee landlordism, with its wastefulness and inefficiency, is a major obstacle to greater yields. The East Punjab example, where land reforms abolished large landholdings more than four decades ago, shows us the way. Wheat cultivation competes at present with cash crops such as oil seeds (canola, sunflower, rapeseed, mustard), cotton and sugarcane. In Punjab, sowing and harvesting of wheat is delayed, with decline in yields, because of the necessity to rotate with crops such as canola. With wheat having become an item in our import bill, the country has to establish its priorities in terms of opportunity/comparative costs of food versus cash crops as an import substitution/foreign exchange saving measure. The atta crisis has served to highlight some of the blight that afflicts the agricultural sector, and wheat in particular. Management of equitable and timely inputs, imports, procurement of domestically produced wheat, transportation and storage, all these have to be dealt with as part of an overall programme for food self-sufficiency. Price determination through some combination of managed prices and market forces may have to be gradually brought in to provide incentives to wheat growers, protection to small farmers, and cushioning the consumer from a too rapid increase in the retail price. But most critical of all, if the wheat shortage is ever to be overcome, land ownership has to devolve towards the landless peasant and the smaller cultivator. Only then can yields increase and the country breathe easy regarding relatively cheap and assured availability of roti.

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