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

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  • Dorosh, Paul
  • Salam, Abdul

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

  • Dorosh, Paul & Salam, Abdul, 2006. "Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options," MPRA Paper 2244, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2244
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    References listed on IDEAS

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    9. Ali Cheema & Asad Sayeed, 2006. "Bureaucracy and Pro-poor Change," Governance Working Papers 22186, East Asian Bureau of Economic Research.
    10. 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.
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    Cited by:

    1. Fazal Husain & Abdul Qayyum, 2006. "Stock Market Liberalisations in the South Asian Region," PIDE-Working Papers 2006:6, Pakistan Institute of Development Economics.
    2. 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.
    3. 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).
    4. Salam, Abdul, 2012. "Review of input and output policies for cereals production in Pakistan:," IFPRI discussion papers 1223, International Food Policy Research Institute (IFPRI).
    5. Abdul Qayyum & A. R. Kemal, 2006. "Volatility Spillover between the Stock Market and the Foreign Market in Pakistan," PIDE-Working Papers 2006:7, Pakistan Institute of Development Economics.
    6. Abdul Jalil & Fahd Zulfiqar & Muhammad Aqeel Anwar & Nasir Iqbal & Saud Ahmed Khan, 2020. "Wheat Support Price: A Note For Policy Makers," PIDE Knowledge Brief 2020:18, Pakistan Institute of Development Economics.
    7. Gulzar Ali & Zhaohua Li, 2017. "An Empirical Investigation on the Role of exports, imports and its Determinants in Foreign Trade of Pakistan," Information Management and Business Review, AMH International, vol. 8(6), pages 39-58.
    8. 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.
    9. 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.
    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. Stephen Davies & Wajiha Saeed & Muhammad Saad Moeen & Tehmina Tanveer & Aamer Irshad, 2016. "Fiscal Space for Investment in Agriculture—A Review of Taxes and Subsidies in Agriculture in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 55(4), pages 873-887.
    12. Abdul SALAM*, 2010. "Distortions in Prices of Food Grains in Pakistan: 1996 to 2006," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 20, pages 13-28.
    13. 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.
    14. 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. 7(2), pages 1-93.
    15. Pieters, Hannah & Swinnen, Johan, 2016. "Trading-off volatility and distortions? Food policy during price spikes," Food Policy, Elsevier, vol. 61(C), pages 27-39.
    16. Salam, Abdul, 2012. "Review of input and output policies for cereals production in Pakistan," PSSP working papers 6, International Food Policy Research Institute (IFPRI).
    17. Dorosh, Paul A. & Salam, Abdul, 2007. "Distortions to Agricultural Incentives in Pakistan," Agricultural Distortions Working Paper Series 48482, World Bank.
    18. Abdul Jalil & Fahd Zulfiqar & Muhammad Aqeel Anwar & Nasir Iqbal & Saud Ahmed Khan, 2023. "Wheat Support Price: A Note for Policymakers (Policy)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(1), pages 115-124.
    19. Abdul Salam, 2012. "Review of Input and Output Policies for Cereals Production in Pakistan," Working Papers id:5176, eSocialSciences.

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    Keywords

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    JEL classification:

    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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