Agriculture Reference
In-Depth Information
FIGURE 4.1
Procurement prices, market prices, and procurement by provincial food
departments and Pakistan Agricultural Storage and Services Corporation
Percent
160
Support price as percentage of market price
PASSCO procurement as percentage of target
PFD procurement as percentage of target
140
120
100
80
60
40
20
0
In this respect government procurement operations have generally mopped up
4-5 million tons of the marketable surpluses during 6-9 weeks of intense ac-
tivities. During 1984/85-2004/05, the share of wheat procurement by PFDs and
PASSCO has been: Punjab Food Department 74 percent, Sindh Food Depart-
ment 7 percent, and PASSCO 18 percent (Government of Pakistan 2003b).
How did these interventions affect wheat price stability? It is difficult to
precisely determine the impact of market intervention by the public sector in
stabilizing market prices. We use two measures to address this question. First,
the intrayear price variability has been low. Note that, except for 1993/94 and
1996/97, wheat prices in a given year have moved in a narrow range, with the
coefficient of variation as low as 0.86 (Table 4.3). The coefficients of variation,
which show the spread of market prices around the annual average of wholesale
prices, ranged from 0.86 to 5.11 percent for wheat (Appendix Table 4A.1) and
from 1.64 to 4.44 percent in the case of wheat flour (Appendix Table 4A.2),
indicating little variation in prices. Thus, consumer prices of
atta
and other
wheat products have moved in a narrow range. Pakistan's success in stabilizing
wheat prices is also grudgingly acknowledged by the World Bank (Faruqee and
Coleman 1996).
Another way to look at the effects on prices is to examine how markets re-
acted in the years that the government could not procure because of infrastruc-
tural constraints. The most recent examples come from the bumper crop years
of 1999/2000, 2000/01, and 2001/02. It is argued that in the absence of gov-
ernment intervention, the wheat market would have crashed, to the disadvan-
