Agriculture Reference
In-Depth Information
BOX 4.1
PASSCO and its functions
The Pakistan Agricultural Storage and Services Corporation (PASSCO) was in-
corporated as a public limited company under the Companies Act, VII of 1913
in June 1973 and commenced its operations in May 1974. One-fourth of its
paid-up capital was contributed by the Government of Pakistan and the balance
by six nationalized banks, namely, National Bank of Pakistan, Habib Bank Lim-
ited, United Bank Limited, Allied Bank Limited, Muslim Commercial Bank
Limited, and Agricultural Development Bank of Pakistan. Its authorized capital
was Rs 100 million and paid-up Rs 30 million.
PASSCO was established in the public sector with a wide charter of activi-
ties involving procurement, storage, and marketing of various agricultural com-
modities, as well as the provision of farm machinery, inputs, and technical ser-
vices to the farmers. Nevertheless, a review of various tasks performed by the or-
ganization suggests that it has concentrated, by and large, on (1) implementation
of the support price program, (2) price stabilization, (3) construction of storage
facilities and development of marketing infrastructure, (4) promotion of agro-
based processing units (such as pulse plants), rice-husking mills, establishment
of cold storage, and provision of farm machinery services to farmers. Of all these
functions, PASSCO is primarily known for intervening in commodity markets of
specified crops, mainly wheat, and procurement of their produce at support price
as announced by the government.
banks to finance the private sector's wheat purchases (FAO 2002). The problem
is that the government could not adhere to this policy for long.
After relatively poor wheat harvests from 2002 to 2004 led to high market
prices of wheat and its products, the government reimposed restrictions on
wheat movements (Dorosh and Salam forthcoming). Around this time, govern-
ment also imported large amounts of wheat and distributed it at subsidized rates.
In 2005, the policy shifted again: movement restrictions were lifted, procure-
ment price increased, and private imports were encouraged. How will these pol-
icy changes play out? Will they be compatible with the existing buffer stock
policies? These are the questions that continue to puzzle policymakers and re-
searchers in the country.
Public Interventions and Their Effects on Prices
About 30-40 percent of the total wheat production is retained and used by farm
households, and the balance is marketed through various channels. Both the
private and public sectors are involved in wheat marketing in Pakistan. On
