Pakistan: Product Specific Support to Wheat Under WTO Regime

Chapter 11: Pakistan: Product Specific Support to Wheat Under WTO Regime Food security policies in Pakistan aim at balancing the interest of producers by supporting farm income and ensuring price stability along with affordable prices of foodgrain to safeguard the interest of consumers. Provincial governments (Punjab, Sindh and Balochistan) and Pakistan Agricultural Storage and Services Corporation Ltd (PASSCO) provide price support to wheat through procurement at the administered price for food security purposes. In this context this chapter deals with estimating and analysing product specific support to wheat during 1995–96 to 2011–12. Result shows that product specific support to wheat in US$ has crossed the maximum permissible product specific support limit for Pakistan during 2008–2009, 2009–2010 and 2011–2012. In Pakistani Rupees, product specific support was above the de minimis limit from 1997–1998 onwards. It clearly shows that Pakistan is facing severe constraints to implement the policy of price support based procurement of wheat for food security purpose under WTO regime. Keywords : PASSCO. Wheat. WTO. Food security. AMS. Hunger. Pakistan Note: This Chapter is an earlier version of Manuscript. Later version is published in a book “The WTO and Food Security: Implications for developing countries” by Springer, Singapore Pages in Book: 133-146 Cite this chapter as: Sharma S.K. (2016) Pakistan: Product Specific Support to Wheat Under WTO Regime. In: The WTO and Food Security. Springer, Singapore 1 The WTO and Food Security: Implications for Developing Countries About the Book • Exam ines the various provisions of Agreem ent on Agriculture (AoA) related to food security and highlights the progress in negotiations on public stockholding under Doha Round • Provides a com prehen sive analysis of food security policies in China, Egypt, India, Indonesia, J ordan, Kenya, Morocco, Pakistan, Tunisia, Turkey, Zam bia and Zim babwe from the perspective of the WTO rules • Highlights the problem s faced by developin g countries in im plem enting food security policies due to existing provisions of the AoA Published in 2016 • • • DOI 10.1007/978-981-10-2179-4 Print ISBN 978-981-10-2178-7 Online ISBN 978-981-10-2179-4 2 Chapter 11 Pakistan: Product specific Support to Wheat Under WTO Regime Abstract Food security policies in Pakistan aim at balancing the interest of producers by supporting farm income and ensuring price stability along with affordable prices of foodgrain to safeguard the interest of consumers. Provincial governments (Punjab, Sindh and Balochistan) and Pakistan Agricultural Storage and Services Corporation Ltd (PASSCO) provide price support to wheat through procurement at the administered price for food security purposes. In this context this chapter deals with estimating and analysing product specific support to wheat during 1995-96 to 2011-12. Result shows that product specific support to wheat in US$ has crossed the maximum permissible product specific support limit for Pakistan during 2008–2009, 2009–2010 and 2011–2012. In Pakistani Rupees, product specific support was above the de minimis limit from 1997-98 onwards. It clearly shows that Pakistan is facing severe constraints to implement the policy of price support based procurement of wheat for food security purpose under WTO regime. Keywords: PASSCO. Wheat . WTO. Food security. AMS. Hunger. Pakistan 11.1: Introduction The objective of agriculture policy in Pakistan is to achieve food security, high productivity, commercialisation of agriculture sector, crop diversification and export orientation. The target of agriculture policy in Pakistan is to achieve agricultural growth rate over 4% (WTO 2007). Agriculture remains the economy’s mainstay, and the share of this sector in GDP was 25% in 2013. The contribution of this sector in total employment was 45% in 2013 (Table 11.1). Due to inefficient resource use, small landholdings and poor quality of inputs and infrastructure, agricultural productivity is low by international standards. Table 11.1: Contribution of the agriculture sector in Pakistan Year 2000 2001 2002 Agriculture, value added (% of GDP) 26 24 23 3 Employment in agriculture (% of total employment) 48 48 42 23 2003 22 2004 21 2005 23 2006 23 2007 23 2008 24 2009 24 2010 26 2011 25 2012 25 2013 Source: World Development Indicators, World Bank ( http://data.worldbank.org/data-catalog/worlddevelopment-indicators, accessed 23 December 2014) 42 43 43 43 44 45 --45 --- Table 11.2: Tariff profile of agricultural goods in Pakistan Products Final bound tariff Applied Tariff All goods 60.0 13.5 Agricultural products 95.5 15.4 Non-agricultural products 54.8 13.2 Animal products 92.9 14.1 Dairy products 100.0 27.4 Fruit, vegetables, plants 100.0 16.1 Coffee, tea 108.3 12.8 Cereals and preparations 102.6 15.7 Oilseeds, fats and oils 97.1 7.7 Sugars and confectionery 112.5 17.1 Beverages and tobacco 99.0 48.9 Cotton 13.0 7.0 Other agricultural products 82.4 6.6 Source: WTO Statistics, http://stat.wto.org/TariffProfile/WSDBTariffPFView.aspx?Language=E&Country=PK, accessed 08 May 2015 As a welfare state, the Pakistan government has to protect the interest of farmers as well as consumers. Achieving self-sufficiency in foodgrain is the main focus of the agriculture policy in Pakistan. Due to various programmes and policies related to the agriculture sector, Pakistan dependency on imports for cereals has declined from 1990–1992 to 2012–2014. Pakistan has the flexibility to impose a high level of tariff on agricultural goods. However, applied tariff is much lower than bound tariff on agricultural goods (Table 11.2). About the food security indicators, Table 11.3 shows that about 21.7% of people in Pakistan were undernourished in 2012–2014. Though the percentage of prevalence of undernourishment has declined from 1990–1992 to 2012–2014, but the number of people suffering from undernourishment has increased in absolute terms during the same period. 4 Depth of food deficit, which shows the difference between the average daily dietary energy intake of an undernourished population and its average minimum energy requirement, has declined by 10 points from 1990–92 to 2012–2014. It is noteworthy that Pakistan scored 19.3 in the Global Hunger Index and thus comes under the category of those countries who are suffering from serious hunger (IFPRI 2014). About the multidimensional poverty, 45.6% of the population in Pakistan are suffering from poverty; an additional 14.9% are near multidimensional poverty. Around 26.5% of Pakistan population is suffering from severe multidimensional poverty. Multidimensional poverty is higher than income poverty by 24.6 points in Pakistan. It shows clearly that individuals living above the income poverty line may still suffer deprivations in education, health and other living conditions (UNDP 2014). Table 11.3: Food security indicators of Pakistan Prevalence of undernourishment Number of people undernourished Depth of the food deficit Cereal import dependency ratio % millions kcal/caput/day % 1990–1992 25.1 28.7 179 8.3 1991–1993 25.7 30.2 184 9.2 1992–1994 24.0 28.9 170 10.3 1993–1995 23.1 28.5 164 10.9 1994–1996 22.1 28.0 156 9.6 1995–1997 21.8 28.3 154 10.1 1996–1998 21.8 29.1 155 9.5 1997–1999 22.0 30.2 158 10.8 1998–2000 22.1 31.1 159 8.6 1999–2001 22.4 32.2 162 5.9 2000–2002 23.4 34.3 171 2.1 2001–2003 24.8 37.2 185 0.9 2002–2004 25.9 39.4 195 0.8 2003–2005 25.6 39.8 194 2.3 2004–2006 24.7 39.1 189 3.1 2005–2007 23.7 38.2 181 3.0 2006–2008 23.0 37.7 176 3.5 2007–2009 22.3 37.2 171 5.6 2008–2010 21.9 37.2 169 5.8 2009–2011 21.7 37.6 168 3.9 2010–2012 21.7 38.3 168 2011–2013 21.8 39.0 169 2012–2014 21.7 39.6 169 - Year Source: FAOSTAT (http://faostat3.fao.org/home/E, accessed 24 December 2014) Food security indicators have a direct and significant impact on human development in a country. Pakistan comes in the low human development category as the HDI value for 5 Pakistan was .0537 in 2013. The HDI value increased from 0.356 to 0.504 during 1980–2013. Table 11.4 shows that indicators related to human development such as life expectancy, expected years of schooling and per capita GNI have shown upward trend during the same period (UNDP 2014). Table 11.4: Pakistan’s HDI based on consistent time series data and new goalposts Year Expected years of schooling 3.7 Mean years of schooling 1.8 GNI per capita (2011 PPP$) 2376 HDI value 1980 Life expectancy at birth 58 1985 59.6 4.1 2.1 2817 0.384 1990 61.1 4.4 2.3 3094 0.402 1995 62.5 4.9 2.8 3284 0.429 2000 63.9 5.5 3.3 3325 0.454 2005 65.2 6.5 4.5 3996 0.504 2010 66.1 7.4 4.6 4381 0.526 2011 66.3 7.5 4.7 4454 0.531 2012 66.4 7.7 4.7 4581 0.535 2013 66.6 7.7 4.7 4652 0.537 0.356 Source: Human Development Report 2014, Explanatory note on the 2014 Human Development Report Composite Indices: Pakistan Given the above-mentioned food security indicators such as undernourishment, hunger and poverty, the agriculture policy plays an important role in achieving a high level of rural and human development in Pakistan. In this regard, domestic support to low-income or resourcepoor farmers and subsidised foodgrain to poor or vulnerable sections of society is very important for ensuring food security in Pakistan. 11.2 Pakistan’s Price Support Mechanism for Wheat Wheat has been the most important staple crop of Pakistan since the 1960s and is considered the major contributor to GDP. Wheat is the major crop in Pakistan, with 80% of farmers growing it on an area of around 9 million hectares (close to 40% of the country’s total cultivated land). Being a major staple crop, Pakistan’s population derives 40–45% of nutrition from wheat (Gain Report 2014). Due to the importance of wheat, successive governments of Pakistan since Independence have intervened heavily in wheat markets, procuring wheat at administered prices to support farmer incomes and subsidising wheat sales to flour mills or directly to consumers with the objective of stabilising prices at levels affordable to consumers (Dorosh 2008). Rice is the crop next in importance to wheat. Unlike wheat, Pakistan has not followed a consistent policy in providing price support to paddy/rice. 6 Table 11.5 shows the trend in procurement/support prices of wheat and rice from 1994–1995 to 2011–2012. Table 11.5: Procurement/support prices of wheat and intervention prices of rice (Rs per 40 kg) Rice Paddy Fiscal Year Wheat Basmati 385 Irri-6 (F.A.Q) Basmati 385 Basmati Super/2000 Irri-6 1994–1995 160.00 389.00 170.00 210.90 -- 102.60 1995–1996 173.00 419.80 183.00 222.00 -- 112.00 1996–1997 240.00 461.78 210.45 255.30 -- 128.80 1997–1998 240.00 461.78 251.62 310.00 360.00 153.00 1998–1999 240.00 -- -- 330.00 400.00 175.00 1999–2000 300.00 -- -- 350.00 425.00 185.00 2000–2001 300.00 -- -- 385.00 460.00 205.00 2001–2002 300.00 -- -- 385.00 460.00 205.00 2002–2003 300.00 -- -- 385.00 460.00 205.00 2003–2004 350.00 -- -- 400.00 # 485.00# 215.00# 2004–2005 400.00 -- -- 415.00 # 510.00# 230.00# 2005–2006 415.00 -- -- -- 560.00# 300.00# 2006–2007 425.00 -- -- -- -- 306.00# 2007–2008 625.00 -- -- -- -- -- 2008–2009 950.00 2500.00 1400.00 1250.00 1500.00 700.00 2009–2010 950.00 2000.00 1200.00 1000.00 1250.00 600.00 2010–2011 950.00 -- -- -- -- -- 2011–2012 1050.00 ----- Not applicable, # indicative prices Source: Agricultural Statistic of Pakistan (2011–2012), page no. 142 -- -- The government’s primary objective in intervening in the price of wheat is to provide consumers with flour at low prices as well as to protect wheat farmers against seasonal price fluctuations. Wheat is a staple and its price a politically sensitive issue, all Pakistani governments has attempted to insulate wheat producers and consumers from price fluctuations (Krueger et al. 1991). Procurement or support prices fixed by the Government of Pakistan are in fact the minimum guaranteed prices and are effective during the post-harvest seasons of the respective crops. The sale of marketable surplus at these prices by the producers is voluntary as they are under no compulsion to sell their produce at the support price. The producers only sell their produce to the procurement agency when the market price falls below the support price level. If market price remains above the support price the growers are free to sell their produce wherever they like (WTO 2015). Tables 11.6 and 11.7 7 provide the information about the procurement of wheat and rice, respectively. There has been no procurement of rice after 1995–1996. Table 11.6: Procurement of wheat (000 Ton) Procurement Year Punjab Sindh KPK Balochistan PASSCO Pakistan 1994–1995 2003.0 535.0 -- 22.0 1180.0 3740.0 1995–1996 1891.0 408.0 9.0 53.0 1087.0 3448.0 1996–1997 1668.0 262.0 -- 2.0 793.0 2725.0 1997–1998 2528.0 401.0 4.0 -- 1051.0 3984.0 1998–1999 2786.0 573.0 -- -- 711.0 4070.0 1999–2000 6336.0 630.0 -- 44.0 1572.0 8582.0 2000–2001 2514.0 429.0 -- 162.0 976.0 4081.0 2001–2002 2844.0 255.0 -- 9.0 937.0 4045.0 2002–2003 2409.0 320.0 -- 0.0 785.0 3514.0 2003–2004 2453.0 179.0 -- 1.0 823.0 3456.0 2004–2005 2438.0 504.0 -- -- 997.0 3939.0 2005–2006 2563.0 709.0 -- -- 1242.0 4514.0 2006–2007 2569.0 566.0 -- 18.0 1269.0 4422.0 2007–2008 2557.0 506.0 -- -- 854.0 3917.0 2008–2009 5782.0 1216.0 90.0 -- 2143.0 9231.0 2009–2010 3722.0 1497.0 300.0 68.0 1127.0 6714.0 2010–2011 3191.0 1395.0 187.0 108.0 1315.2 6196.2 2011–2012 2781.0 1152.0 317.0 107.0 Source: Agricultural Statistic of Pakistan (2011–2012), page no. 241 1434.9 5791.9 Table 11.7: Procurement of rice (000 Ton) Punjab Year Sindh Pakistan Basmati Irri-6 Total Irri-6 Total Basmati Irri-6 Total 1991–1992 121.6 0.1 121.7 370.2 370.2 121.6 370.3 491.9 1992–1993 500.5 -- 500.5 454.0 454.0 500.5 454.0 954.5 1993–1994 144.9 -- 144.9 686.3 686.3 144.9 681.4 831.2 1994–1995 283.5 -- 283.5 -- -- 283.5 -- 283.5 1995–1996 50.8 -50.8 154.6 154.6 Source: Agricultural Statistic of Pakistan (2011–2012), page no. 242 50.8 154.6 205.4 Figure 11.1: Trend in production and consumption of wheat in Pakistan (000 Ton) 8 30,000 25,000 20,000 15,000 10,000 5,000 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1990 1988 1987 1986 1980 1970 1960 CONSUMPTION PRODUCTION Source: Index Mundi (http://www.indexmundi.com/, accessed on 24 December 2014) Figure 11.2: Trend in export and import of wheat in Pakistan (000 Ton) 6,000 5,000 4,000 3,000 2,000 1,000 -1,000 -2,000 1960 1970 1980 1986 1987 1988 1990 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 - -3,000 -4,000 TRADE BALANCE EXPORT IMPORT Source: Index Mundi (http://www.indexmundi.com/, accessed 24 December 2014) Pakistan has achieved self-sufficiency in wheat as shown in Figure 11.1 and has also become a net exporter of wheat in recent years (Figure 11.2). Provincial governments (Punjab, Sindh and Balochistan) and Pakistan Agricultural Storage and Services Corporation Ltd (PASSCO) continue to intervene heavily in the market, especially in the main wheat-producing province of the Punjab. PASSCO has been responsible for the provision of food security at the national level, by maintaining strategic reserves of wheat and other specified commodities, extending state welfare to farmers by providing support to farmers and stabilising prices by intervening in the domestic market. PASSCO played a very important role in ensuring food security in Pakistan. 9 11.3 Agreement on Agriculture (AoA) and Domestic Support to the Agriculture Sector Pakistan is a founder member of WTO. Supporting tables relating to commitments on agricultural products in Part IV of the schedules show that Pakistan notified domestic support in Pakistan Rupees (WTO 1995). During 1986–1988, product specific support was negative for all except sugarcane (Table 11.10). For wheat producers, product specific support was Rs. (−) 4532 million during the base period, that is 1986–1988. Non-product specific support was Rs. 1567 million which was less than 10% of Rs. 197,320 million, which is the average value of production of base period from 1986–1987 to 1988–1989. Therefore, the AMS for Pakistan was below the de minimis limit during 1986–1988, that is there is no final bound AMS. The maximum limit to provide AMS is 10% of value of production of a specific crop for product specific support and 10% of the total value of agriculture production for nonproduct specific support. Pakistan has notified domestic support to the agriculture sector for the period 1995–2011 (Table 11.8). However, Pakistan has notified domestic support in US$ rather than in Pakistani Rupees. Table 11.8: Notifications related to domestic support submitted by Pakistan to WTO Document number Implementation date Issue date G/AG/N/PAK/3 1995 28/05/1997 G/AG/N/PAK/5 1996 19/02/1998 G/AG/N/PAK/6 1997 12/08/1999 G/AG/N/PAK/8 1998, 1999 20/08/2001 G/AG/N/PAK/10 2000, 2001, 2002, 2003, 2004, 2005, 2006 09/01/2008 G/AG/N/PAK/10/CORR.1 2000, 2001, 2002, 2003, 2004, 2005, 2006 01/02/2008 2007, 2008, 2009, 2010, 2011 16/03/2015 G/AG/N/PAK/16 Source: Pakistan’s domestic support notifications to Committee on Agriculture Pakistan is giving support to the agriculture sector mainly in the form of general services which come under Green Box (Table 11.9). As per notifications to WTO Committee on Agriculture (CoA), Pakistan has been spending money on provision of wheat storage facilities to ensure food security programmes. For example, Pakistan spent US$112 million in the year 2011 on government storage and food aid for food security purposes. Table 11.10 reveals that the Amber box support to the agriculture sector was below the de minimis limit during 1995–2011. Product specific support to the agriculture sector is negative or below the de minimis limit for all the crops during 1995–2011. 10 Table 11.9: Trend in Green Box support to agriculture sector in Pakistan Category/product AGST 1995 PR million Green Box 4113 440 General services 4027 440 Research, including general research 261 13 Pest and disease control 6 1 Training services 564 54 Extension and advisory services -2 Marketing and promotion services 399 0 Infrastructural services 2797 370 Public stockholding for food security purposes 86 1 Art. 6.2 2085 0 Source: Pakistan domestic support notifications to WTO Committee on Agriculture 2000 2005 494 495 1 1 0 0 1 492 --- 645 645 1 4 -1 8 631 --- 2006 US$ million 523 523 9 2 109 3 3 397 --- 2007 2010 2011 961 850 155 6 7 46 8 629 111 -- 767 698 33 21 5 46 8 585 69 -- 265 154 19 0 3 17 1 114 112 -- 2006 2007 2010 2011 ------------80 ------264 -----390 ------609 -----215 Table 11.10: Trend in the Amber Box support to the agriculture sector in Pakistan Category/product AGST 1995 PR million Product specific AMS/EMS (ST/DS:4 to DS:8) 436 -Onion -0 Potato −3 -Grain −1041 -Rice basmati −2113 −20 Rice coarse −875 −10 Wheat −4532 −172 Safflower −2 -Soybean −20 -Sunflower −7 -Sugarcane 436 -Seed cotton −3368 -Non-product specific AMS (ST/DS:9) 1567 11 Source: Pakistan domestic support notifications to WTO Committee on Agriculture 11 2000 2005 US$ million ------------−894 −43 -----------198 ------647 -----571 11.4 AoA and product specific support to Wheat Product specific support to wheat was negative during the base period that is 1986–1988 (Table 11.11). It was due to the fact that applied administered prices for wheat was higher than fixed external reference price. The external reference price during the base period was Rs. 3147. However, Pakistan used external reference price of wheat in US$ for the domestic support notifications during 1995–2006. In response to a question raised by Canada, Australia and New Zealand about the use of US$ rather than Rupees (COA meeting number 20, ID20057 dated 29/09/1999), Pakistan replied Since 1989, Pakistan has experienced a high rate of inflation. In 1994, this rate was approximately 13.02 per cent. In addition, the national currency has undergone a great deal of depreciation. Pakistan believes that any calculation of the AMS using the national currency would have presented a distorted picture. The US dollar, a currency which remained stable in value terms, was chosen Table 11.11: Product specific support for wheat in Pakistan during 1986–1988 Applied administered price External reference price Eligible production Total market price support Rupees/MT Rupees/MT 000 MT Rupees millions 1986–1987 2000 3132 5035 −5699 1987–1988 2063 3079 3975 −4038 1988–1989 2125 3229 3494 −3857 Average 2063 3147 4162 −4531 Year Source: WTO document number G/AG/AGST/PAK For the years 1995–1996 to 1999–2000, Pakistan used procurement of wheat as eligible production for the administered price that is procurement price. But, Pakistan used total production as eligible production for the period 2000–2001 to 2006–2007. In the notification for the period 2007–2008 to 2011–2012, Pakistan again used procurement of wheat at administered price as eligible production. Notifications related to domestic support to agriculture sector in Pakistan show that product specific support was negative and below the de minimis limit during 1995–1996 to 2006–2007. It was due to the fact that the administered price was below the external reference price for wheat during 1995–1996 to 2006–2007. However, this trend has reversed after 2007–2008 due to the sharp increase in support price of wheat (Figure 11.3). Due to this, product specific support was positive but below the de minimis limit for the period 2007–2008 to 2011–2012. However, product specific support to wheat was 9.20% of the value of production in the year 2011–2012, which is very close to the de minimis limit (Table 11.12). 12 Table 11.12: Notified product specific support to wheat in Pakistan ERP Eligible production Product specific support Value of production (VoP) Share US$/Ton US$/Ton 000 MT (US$ million) (US$ million) % 1995–1996 129 175 3740 −172 2536 −6.78 1996–1997 154 175 3448 −72 2814 −2.57 1997–1998 139 175 3984 −143 3000 −4.78 1998–1999 128 175 4070 −191 3001 −6.37 1999–2000 145 175 8579 −257 2776 −9.27 2000–2001 128 175 19,024 −894 3239 −27.60 2001–2002 122 175 18,227 −966 2418 −39.95 2002–2003 128 175 19,183 −902 2693 −33.48 2003–2004 152 175 19,500 −449 3039 −14.76 2004–2005 169 175 21,612 −140 3581 −3.92 2005–2006 173 175 21,277 −43 4040 −1.05 2006–2007 175 175 23,295 0 3795 0.00 2007–2008 264 175 3525 264 5509 4.79 2008–2009 303 175 5172 660 7308 9.03 2009–2010 283 175 5291 574 7065 8.12 2010–2011 278 175 5927 609 7605 8.01 647 7034 9.20 Year Procurement price 2011–2012 294 175 5432 Source: Pakistan’s WTO notifications to Committee on Agriculture. Figure 11.3: Comparison of external reference price (ERP) and administered price (US$/Ton) 350 300 250 200 150 100 50 0 13 2011-12 Source: Pakistan’s WTO notifications to Committee on Agriculture. 2010-11 EXTERNAL REFERENCE PRICE 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 1995-96 ADMINISTERED PRICE Table 11.13: Trend in product specific support to wheat: Pakistan (in US$) Year Exchange rate 1 Product specific support PS as a % of VoP Administered price ERP Production Procurement 2 Value of production (VoP) 3 US$/Ton US$/Ton 000 Tons 000 Tons Million US$ Million US$ % 1995–1996 33.6 129 175 16,907 3448 2536 −159 −6.27 1996–1997 39.0 154 175 16,651 2725 2814 −58 −2.06 1997–1998 43.2 139 175 18,694 3984 3000 −144 −4.80 1998–1999 46.9 128 175 17,858 4070 3001 −191 −6.36 1999–2000 51.8 145 175 21,079 8582 2776 −259 −9.33 2000–2001 58.4 128 175 19,024 4081 3239 −190 −5.87 2001–2002 61.4 122 175 18,227 4045 2418 −214 −8.85 2002–2003 58.5 128 175 19,183 3514 2693 −164 −6.09 2003–2004 57.6 152 175 19,500 3456 3039 −80 −2.63 2004–2005 59.4 169 175 21,612 3939 3581 −26 −0.73 2005–2006 59.9 173 175 21,277 4514 4040 −8 −0.20 1 0.03 2006–2007 60.6 175 175 23,295 4422 3795 2007–2008 62.6 264 175 20,959 3917 5509 293 5.32 2008–2009 78.5 303 175 24,033 9231 7308 1177 16.11 2009–2010 83.8 283 175 23,311 6714 7065 728 10.30 2010–2011 85.5 278 175 25,214 6196 7605 637 8.38 2011–2012 89.2 294 175 23,473 5792 7034 Source: Author’s calculation based on information extracted from Agricultural Statistic of Pakistan (2011–2012) and WTO notifications 690 9.81 1 World Development Indicators, World Bank Procurement and procurement price that is administered price data is extracted from Agricultural Statistic of Pakistan (2011–2012: page no. 241 for procurement and page no. 208 for procurement price). Procurement data in Tables 11.10 and 11.11 are not the same for some years due to time lag 3 Value of production data are based on FAOSTAT for the year 1995–1996 to 2006–2007. For remaining years, Value of Production is based on WTO notifications 2 14 Table 11.14: Trend in product specific support to wheat: Pakistan (in Rs) Administered price ERP Production Procurement Value of production (VoP) 4 Product specific support PS as a % of VoP Rs/Ton Rs/Ton 000 Tons 000 Tons Million Rs. Million Rs. % 1995–1996 4325 3150 16,907 3448 85139 4051 4.76 1996–1997 6000 3150 16,651 2725 109,703 7766 7.08 1997–1998 6000 3150 18,694 3984 129,613 11,354 8.76 1998–1999 6000 3150 17,858 4070 140,678 11,600 8.25 1999–2000 7500 3150 21,079 8582 143,695 37,332 25.98 2000–2001 7500 3150 19,024 4081 189,293 17,752 9.38 2001–2002 7500 3150 18,227 4045 148,533 17,596 11.85 2002–2003 7500 3150 19,183 3514 157,553 15,286 9.70 2003–2004 8750 3150 19,500 3456 174,974 19,354 11.06 2004–2005 10,000 3150 21,612 3939 212,556 26,982 12.69 2005–2006 10,375 3150 21,277 4514 241,845 32,614 13.49 2006–2007 10,625 3150 23,295 4422 230,116 33,054 14.36 2007–2008 15,625 3150 20,959 3917 344,588 48,865 14.18 2008–2009 23,750 3150 24,033 9231 573,678 190,159 33.15 2009–2010 23,750 3150 23,311 6714 592,047 138,308 23.36 2010–2011 23,750 3150 25,214 6196 650,228 127,638 19.63 2011–2012 26,250 3150 23,473 5792 627,714 Source: Author’s calculation based on information extracted from Agricultural Statistic of Pakistan (2011–2012) and WTO notifications 133,795 21.31 Year 4 Value of Production is calculated by converting VoP in Table 11.14 in local currency. 15 Though, Pakistan has notified product specific support to wheat for the period 1995–1996 to 2011–2012, but there is a mismatch between the procurement data in WTO notifications and information given in Agricultural Statistic of Pakistan (2011–2012). It seems that Pakistan has underestimated procurement data for the period 2007–2008 to 2011–2012. Therefore, product specific support for Pakistan is calculated by using procurement data given in Agriculture Statistic of Pakistan (2011–2012). This calculation is done in US$ as well as in Pakistan currency. Figure 11.4: Product specific support to wheat during 1995–2011 (as a percentage of value of production) 40 35 30 25 20 15 10 5 0 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02 2000-01 1999-00 1998-99 1997-98 1996-97 -10 1995-96 -5 -15 In US$ In Rs. DE MINIMIS LIMIT Source: based on Tables 11.13 and 11.14 Calculations related to domestic support to wheat in US$ (Table 11.13 and Figure 11.4) show that Pakistan has breached the de minimis limit that is 10% of value of production of wheat during 2008–2009 and 2009–2010. However, if the product specific support on account of procurement of wheat is calculated in Rs. (the currency in which ERP was notified by Pakistan), then Pakistan has breached the de minimis in almost all the years from 1999–2000 onwards (Table 11.14 and Figure 11.4). It may be noted that procured quantity of wheat and not the total production has been taken as the eligible production in these calculation. With 39 million people in Pakistan being undernourished, procurement of wheat by the government at administered prices is an important component of food security policies. If the procurement scheme has to be restricted or limited in some manner, due to provisions on the de minimis support, it would introduce fresh challenges in fighting an already serious situation of hunger in Pakistan. 16 References Dorosh P, Salam, A (2008) Wheat market and price stabilisation in Pakistan: an analysis of policy option. 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