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Wheat Markets and Price Stabilisation in Pakistan : An Analysis of Policy Options

Author

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  • Paul Dorosh

    (PIDE)

  • Abdul Salam

Abstract

This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on overall price levels. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs.

Suggested Citation

  • Paul Dorosh & Abdul Salam, 2006. "Wheat Markets and Price Stabilisation in Pakistan : An Analysis of Policy Options," Microeconomics Working Papers 22188, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:22188
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    References listed on IDEAS

    as
    1. Dorosh, Paul & Valdés, Alberto, 1990. "Effects of exchange rate and trade policies on agriculture in Pakistan:," Research reports 84, International Food Policy Research Institute (IFPRI).
    2. Roland-Holst, David & Tarp, Finn, 2003. "Globalization, Economic Reform, and Structural Price Transmission: SAM Decomposition Techniques with an empirical application to Vietnam," MPRA Paper 29367, University Library of Munich, Germany.
    3. Paul Dorosh & Muhammad Khan Niazi & Hina Nazli, 2003. "Distributional Impacts of Agricultural Growth in Pakistan: A Multiplier Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 42(3), pages 249-275.
    4. Dorosh, Paul A., 2001. "Trade Liberalization and National Food Security: Rice Trade between Bangladesh and India," World Development, Elsevier, vol. 29(4), pages 673-689, April.
    5. Siddiqui, Rizwana & Kemal, A R, 2006. "Poverty-reducing or Poverty-inducing? A CGE-based Analysis of Foreign Capital Inflows in Pakistan," MPRA Paper 2283, University Library of Munich, Germany.
    6. Ahmad, Munir & Croraton, Caesar & Qayyum, Abdul & Iqbal, Muhammad & Dorosh, Paul, 2005. "Impact of Domestic Policies towards Agricultural Trade Liberalization and Market Reform on Food Security in Pakistan," MPRA Paper 72932, University Library of Munich, Germany.
    7. Steven Haggblade & Jeffrey Hammer & Peter Hazell, 1991. "Modeling Agricultural Growth Multipliers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 361-374.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Unknown, 2011. "Journal of International Agricultural Trade and Development, Volume 07, Issue 2," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 0(Number 2), pages 1-93.
    2. Salam, Abdul, 2012. "Review of input and output policies for cereals production in Pakistan:," IFPRI discussion papers 1223, International Food Policy Research Institute (IFPRI).
    3. Pieters, Hannah & Swinnen, Johan, 2016. "Trading-off volatility and distortions? Food policy during price spikes," Food Policy, Elsevier, vol. 61(C), pages 27-39.
    4. Elena Briones Alonso & Jo Swinnen, 2015. " A value chain approach to measuring distortions to incentives and food policy effects (with application to Pakistan’s grain policy)," Working Papers LICOS Centre for Institutions and Economic Performance 493428, KU Leuven, Faculty of Economics and Business, LICOS Centre for Institutions and Economic Performance.
    5. Salam, Abdul, 2012. "Review of input and output policies for cereals production in Pakistan:," PSSP working papers 6, International Food Policy Research Institute (IFPRI).
    6. Mariano, Marc Jim M. & Giesecke, James A., 2014. "The macroeconomic and food security implications of price interventions in the Philippine rice market," Economic Modelling, Elsevier, vol. 37(C), pages 350-361.
    7. Muhammad Bashir & Steven Schilizzi, 2015. "Food security policy assessment in the Punjab, Pakistan: effectiveness, distortions and their perceptions," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 7(5), pages 1071-1089, October.
    8. Briones Alonso, Elena & Swinnen, Johan, 2016. "Who are the producers and consumers? Value chains and food policy effects in the wheat sector in Pakistan," Food Policy, Elsevier, vol. 61(C), pages 40-58.
    9. Dorosh, Paul A. & Salam, Abdul, 2007. "Distortions to Agricultural Incentives in Pakistan," Agricultural Distortions Working Paper Series 48482, World Bank.
    10. Ali Naqvi & Miriam Rehm, 2014. "A multi-agent model of a low income economy: simulating the distributional effects of natural disasters," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 9(2), pages 275-309, October.
    11. repec:pid:journl:v:55:y:2016:i:4:p:873-887 is not listed on IDEAS
    12. repec:pje:journl:article10vi is not listed on IDEAS
    13. Abdul Salam, 2012. "Review of Input and Output Policies for Cereals Production in Pakistan," Working Papers id:5176, eSocialSciences.
    14. Sahito, Jam Ghulam Murtaza, 2015. "Market integration of wheat in Pakistan," Discussion Papers 72, Justus Liebig University Giessen, Center for international Development and Environmental Research (ZEU).
    15. Paul Dorosh, 2009. "Price stabilization, international trade and national cereal stocks: world price shocks and policy response in South Asia," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 1(2), pages 137-149, June.

    More about this item

    Keywords

    wheat; procurement; sales; trade; price comparison;

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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