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Impact of Domestic Policies towards Agricultural Trade Liberalization and Market Reform on Food Security in Pakistan

Author

Listed:
  • Ahmad, Munir
  • Croraton, Caesar
  • Qayyum, Abdul
  • Iqbal, Muhammad
  • Dorosh, Paul

Abstract

Performance of the agriculture sector over the last four decades remained quite satisfactory with an average growth rate of 3.4% per annum. Still the country is far behind in its efforts to provide an acceptable level of dietary requirement to its people even at the aggregate level. The daily average availability of calories per person in the country is significantly lower than the other developing and developed nations. Though share of wheat is declining overtime, it is still the dominant source of total calories intake and thus plays a vital role in food security in the country. The government of Pakistan had been pursuing interventionist policies quite actively in agricultural inputs as well as outputs markets to ensure food security. Though most of these interventions have now been abolished, but some still remains. Particularly, wheat marketing mainly is being handled by the public sector. The comparison of incidentals of government-owned departments with that of the private traders clearly shows inefficiency of the former. In addition to cost difference, the corruption is pervasive in commodity marketing particularly in public sector. Eliminating the government interventions the results of the CGE model lead us to draw four major conclusions: 1) price of wheat would turn out to be too high to be affordable to the consumers; 2) Production may not increase much to compensate to bring the consumer prices down; 3) The loss in consumer surplus will be more than the producer gain; and 4) All household groups will face lower welfare except the urban non poor: The latter may look for cheaper food substitutes. The dynamic long-run effects have not been captured in this model. Though the existing system of procurement and distribution creates isincentives for the private sector to invest in wheat trade, it however may not be advisable to leave the wheat economy fully at the behest of the markets owing to the importance of wheat in household consumption and production. It is suggested that the government should slowly step out of the food market and let the market function freely. However, the system of effective monitoring and maintaining an optimal size of buffer stock for wheat can avoid extreme food price fluctuations and shortages in the country. The stock purchase and release by the government should be based on market prices.

Suggested Citation

  • 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.
  • Handle: RePEc:pra:mprapa:72932
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    File URL: https://mpra.ub.uni-muenchen.de/72932/1/MPRA_paper_72932.pdf
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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. Ali Muhammed Khushk & Laurence E.D. Smith, 1996. "A Preliminary Analysis of the Marketing of Mango in Sindh Province, Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(3), pages 241-255.
    3. M. Azeem Khan & Muhammad Iqbal & Iftikhar Ahmad & Manzoor H. Soomro, 2002. "Economic Evaluation of Pesticide Use Externalities in the Cotton Zones of Punjab, Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 41(4), pages 683-698.
    4. Sarfraz Khan Qureshi, 1974. "The Performance of Village Markets for Agricultural Produce.A Case Study of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 13(3), pages 280-307.
    5. M. Ghaffar Chaudhry & Shamim A. Sahibzada, 1995. "Agricultural Input Subsidies in Pakistan: Nature and Impact," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 34(4), pages 711-722.
    6. Tahir, Z., 1997. "Integration of agricultural commodity markets in the South Punjab, Pakistan," IWMI Research Reports H020865, International Water Management Institute.
    7. Faiz Mohammad, 1977. "Pricing Efficiency in Agricultural Markets in Pakistan," PIDE-Working Papers 1977:106, Pakistan Institute of Development Economics.
    8. Zubair Tahir & Khalid Riaz, 1997. "Integration of Agricultural Commodity Markets in Punjab," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(3), pages 241-262.
    9. Turvey, Ralph & Cook, Eric, 1976. "Government Procurement and Price Support of Agricultural Commodities: A Case Study of Pakistan," Oxford Economic Papers, Oxford University Press, vol. 28(1), pages 102-117, March.
    10. Abedullah & Mubarak Ali, 2001. "Wheat Self-sufficiency in Different Policy Scenarios and Their Likely Impacts on Producers, Consumers, and the Public Exchequer," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(3), pages 203-223.
    11. Rashid Amjad & A.R. Kemal, 1997. "Macroeconomic Policies and their Impact on Poverty Alleviation in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 36(1), pages 39-68.
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    Citations

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    Cited by:

    1. Paul Dorosh & Abdul Salam, 2008. "Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(1), pages 71-87.
    2. Elena Briones Alonso & Johan Swinnen, 2015. "A Value Chain Approach to Measuring Distortions to Incentives and Food Policy Effects (with application to Pakistan’s grain policy)," Working Papers id:6895, eSocialSciences.
    3. Ahmad, Munir & Iqbal, Muhammad & Farooq, Umar, 2015. "Food Security and its Constraining Factors in South Asia: Challenges and Opportunities," MPRA Paper 72868, University Library of Munich, Germany.
    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. Munir Ahmad & Umar Farooq, 2010. "The State of Food Security in Pakistan: Future Challenges and Coping Strategies," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 49(4), pages 903-923.
    6. World Bank, "undated". "South Asia Economic Focus, June 2011 : Food Inflation," World Bank Other Operational Studies 12662, The World Bank.

    More about this item

    Keywords

    Government Interventions; Wheat; Food Security; CGE MOdel;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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