On Tuesday, the Economic Coordination Committee (ECC) reversed its one month old decision to re­duce the country’s strategic wheat reserves and also cut the import requirements. According to reports, the Ministry of National Food, Security and Research ad­vocated for increasing national wheat strategic reserves, and pointed out that the current quantity of wheat stocks is insufficient in the wake of the recent floods due to which farmers have incurred financial damages that add to the issues of rising local wheat prices as well as hoarding and smuggling.

To ensure the availability of wheat across the coun­try and to stabilise local wheat prices, it was proposed that the quantum of wheat strategic reserves may be re­tained at the level of 2 million metric tons. Given that the restriction on imports has been waived, the ECC has di­rected the Trading Corporation of Pakistan to arrange a further quantity of 800,000 metric tons either through government-to-government deal or open tender. Howev­er, a provision has been added that no subsidy should be provided for such imports of wheat given the fiscal con­straints at the moment. As it is, the government is paying a subsidy of Rs59 per kg on imported wheat to provide wheat flour at relatively lower rates on the government-run utility stores corporation.

These are necessary measures given the unprecedented devastation that has taken place as a result of the floods. It is estimated that the agricultural sector has taken a hit of about Rs500 billion as the rains have damaged vast swathes of rich agricultural land and crops. Given how the prices of wheat and related commodities are expected to increase go­ing forward, it is imperative that we shore up our reserves as a contingency plan so that the impact can be minimised.