Another IMF Condition Met: Govt Exits Wheat Procurement

[Oldenwisdom...قول بزرگ]

I do agree with you that the IMF is a tool, and the tool is as good as its user. We must remember that it was Pakistan that went to the IMF, World Bank, and Paris Club more than 20 times during its existence, not the other way around.

And there is a reason for that... keep the system liquid, trade flow and most importantly as a lender of last resort keep the insure creditors!

It does not solve underlying problems... it will mandate costs on society that the host may feel onerous... for example increasing costs of utilities or making transition to solar harder or more expensive.

The most the IMF can do is help you establish policies to rectify issues and inject liquidity so you can continue operations. The loan enables borrowers in difficulty to rebuild their international reserves, stabilize their currency, and continue making their import payments, issues that Pakistan faced.

By mandating oil producers to sell their oil in dollars The US created an artificial demand for it that is even heavier on those states that do not produce a trade surplus either in dollars. They'll forever need a bailout because it is structural. And no banker will tell a state to think outside of the box.

As for fiat currency, it eliminates one central problem in international trade: physical gold and silver were too cumbersome to move and insufficient for international exchange as borrowing needs grew; there wasn't enough gold to back dollars, among other issues. There were other issues with the Brenton Woods system, as you can search. Thus, Nixon took a correct course of action, be it forced. So, unless there is something better, this was the best solution post-World War II and its aftermath.

That is a fallacy.
US had not once but twice printed more dollars than the reserves they had... that is an outright fraud. The first one was when FDR confiscated all gold in 1933 at $20 an ounce and than next year repriced it at $35... almost halving the worth of all cash in hand instantly. The second was done by Nixon when the world caught on to the printer. Today it stands at around $4,500... it is not gold that is appreciating it the currency that is depreciating.

Second, fiat does not eliminate any international trade issues... it is the cause of all crisis... as it is an instrument of manipulation. Finally what you're talking about is not what fiat offers but settlements... and no ships carry corresponding cash either. And those were even done historically on notes that were settled between merchants periodically. It is why dollar was not the first choice as a reserve currency post world War however US being the victor impressed upon the use of Dollar as the global reserve and fully convertible in corresponding amount of gold. US immediately set out to burn that trust and enforce fiat on the back of its military might alone. And now it has reached an untenable point once more... and therefore the transition.
Fiat doesn't differentiate between true holder or workers earnings... it can be granted to the bearer in unlimited numbers... eclipsing ones who worked for their buck... and no one can differentiate or discriminate it as a legal tender for goods and services. Something that cannot be done with physical, tangible and discernible.

 

[Fatman17]

Pakistan had the PL-480 credit program with the US. Buying soybean and especially wheat during Ayub Khan ML.
This was ended when a new wheat variety was introduced called Mexi-Pak. A high yield seed.

 

[mythbuster]

Pakistan had the PL-480 credit program with the US. Buying soybean and especially wheat during Ayub Khan ML.
This was ended when a new wheat variety was introduced called Mexi-Pak. A high yield seed.

Pakistan was not buying wheat , it was given as a part of aid program.

 

[Fatman17]

Pakistan was not buying wheat , it was given as a part of aid program.

It was both. Aid and sell.

AI Overview


The PL-480 (Public Law 480) scheme, or "Food for Peace," was a landmark U.S. program started in 1954 to sell surplus agricultural goods (like wheat) to developing nations using their local currency, reducing U.S. surpluses while providing food aid for emergencies and fostering development, though it also tied food aid to foreign policy and faced criticisms about dependency and market impacts.
Key Aspects of PL-480:

• Origin: Established by President Eisenhower to use food surpluses for foreign policy goals and economic stability, notes this ArcGIS StoryMaps article and this Dawn.com article.
• Mechanism: Allowed recipient countries to pay for U.S. farm products in their own currency, easing foreign exchange burdens, explains this BBC article and this Middle East Research and Information Project article.
• Dual Purpose: Addressed U.S. farm surpluses and provided humanitarian aid for famines or disasters, with programs for development, according to the U.S. Department of State history and this USAID history article.

 

[SoulSpokesman]

@Meengla sb

Reminds me of the Argentina from a few decades ago blaming the IMF for all their ills while the Argentinians were living high.

Correct. Keep your current account at close to balance and fund your fiscal deficit through domestic savings. You will never need to go to IMF.

Regards

 

[Vikramaditya1]

During the negotiations for China's entry into the WTO, one of the conditions was that China had to open either its wheat or soybean market. After weighing the pros and cons, the Chinese government agreed to open the soybean market while keeping the wheat market protected.
Subsequently, American soybeans quickly dominated the Chinese market. In the ensuing struggles, China paid a heavy price for this initial decision.

Pakistan will pay a heavy price for today's decision.

One the plus side, your trade with the west increased many times. Soybean can wait, you got market access which is direct result of your induction into the trade body. So the "globalists" are not all bad. Or is it that, globalism for me, protectionism for thee?

IMF conditions will be good for Pakistan in the long run, government procurement unless emergency procurement is a drain on the exchequers. MSP among other things should be done away for market price determination.

 

[Michael]

One the plus side, your trade with the west increased many times. Soybean can wait, you got market access which is direct result of your induction into the trade body. So the "globalists" are not all bad. Or is it that, globalism for me, protectionism for thee?

IMF conditions will be good for Pakistan in the long run, government procurement unless emergency procurement is a drain on the exchequers. MSP among other things should be done away for market price determination.

Your understanding is quite peculiar.

Open markets certainly have many benefits. But they require careful balancing and strategic security considerations.

Between the soybean and wheat markets, China chose to protect the wheat market and open the soybean market. This is because soybeans are not a staple food for Chinese people; their primary use in China is as animal feed, and they are somewhat replaceable. Wheat, on the other hand, is a staple food for half of the Chinese population and is irreplaceable.
Even so, opening the soybean market still had a huge impact on China. We paid a heavy price for it.

I'm not saying that opening the soybean market was a mistake. This is an inevitable cost of global economic activity.

Is wheat a staple food for Pakistanis? You know better than I do.

One of the core issues in the tariff negotiations between the US and India is India opening its wheat market. It's said that India absolutely refuses to agree to this condition.
When the Indian government can no longer resist US pressure and is forced to open the Indian wheat market, you will see the results you want.

 

[Vikramaditya1]

Your understanding is quite peculiar.

Open markets certainly have many benefits. But they require careful balancing and strategic security considerations.

Between the soybean and wheat markets, China chose to protect the wheat market and open the soybean market. This is because soybeans are not a staple food for Chinese people; their primary use in China is as animal feed, and they are somewhat replaceable. Wheat, on the other hand, is a staple food for half of the Chinese population and is irreplaceable.
Even so, opening the soybean market still had a huge impact on China. We paid a heavy price for it.

I'm not saying that opening the soybean market was a mistake. This is an inevitable cost of global economic activity.

Is wheat a staple food for Pakistanis? You know better than I do.

One of the core issues in the tariff negotiations between the US and India is India opening its wheat market. It's said that India absolutely refuses to agree to this condition.
When the Indian government can no longer resist US pressure and is forced to open the Indian wheat market, you will see the results you want.

No the point I was making is we all make sacrifices. You made a bet and raked in billions and trillions from your addition to the western dominated WTO. So, whatever you did is justified at the end because, well look at China. You wrapped yourself with globalism for decades.

I don't think Pakistanis or any country will go hungry if food is not bought on MSP. It's an excuse for farmers to keep producing such water intensive crops in a water stressed country.
As for India, we are the second largest wheat producers in the world. I don't think we will be outcompeted in our own market.

 

[Michael]

As for India, we are the second largest wheat producers in the world. I don't think we will be outcompeted in our own market.

You'll see the outcome when India opens its wheat market to the world.

From the perspective of objective economic development principles, defeating Indian domestic wheat production will be a very easy task, provided India dares to open its wheat market.

 

[Owaiz]

No the point I was making is we all make sacrifices. You made a bet and raked in billions and trillions from your addition to the western dominated WTO. So, whatever you did is justified at the end because, well look at China. You wrapped yourself with globalism for decades.

I don't think Pakistanis or any country will go hungry if food is not bought on MSP. It's an excuse for farmers to keep producing such water intensive crops in a water stressed country.
As for India, we are the second largest wheat producers in the world. I don't think we will be outcompeted in our own market.

India is the second largest wheat producer in the world only because of the heavy subsidies the farmers receive. In a free trade world, farmers in countries like India , Japan , EU etc would not be able to compete against the economies of scale that corporate American farms which are 1000x+ the size are able to achieve.

The Indian government realises this. That is why they are willing to bear the pain of 50% American tariffs in order to protect small farmers.

On "average", the Indian economy might be better off if small farmers are thrown under the bus and Indian industry gets better access to American markets, but it would be a far more unequal economy, with a few industrialists reaping most of the benefits and hundreds of millions losing their livelihoods. The same argument holds for Pakistan. Luckily for Indian farmers, their government has to worry about how they vote, whereas in Pakistan, elections are simply rigged as a matter of course.

 

[mythbuster]

India is the second largest wheat producer in the world only because of the heavy subsidies the farmers receive. In a free trade world, farmers in countries like India , Japan , EU etc would not be able to compete against the economies of scale that corporate American farms which are 1000x+ the size are able to achieve.

The Indian government realises this. That is why they are willing to bear the pain of 50% American tariffs in order to protect small farmers.

On "average", the Indian economy might be better off if small farmers are thrown under the bus and Indian industry gets better access to American markets, but it would be a far more unequal economy, with a few industrialists reaping most of the benefits and hundreds of millions losing their livelihoods. The same argument holds for Pakistan. Luckily for Indian farmers, their government has to worry about how they vote, whereas in Pakistan, elections are simply rigged as a matter of course.

Subsistence farmers in this day and age are a big drain on national exchequer..... ultimately , these farmers have to go away and replaced by the corporate farming..... sooner the better , Pakistan , specifically, Punjab is heading towards it.

 

[Owaiz]

Subsistence farmers in this day and age are a big drain on national exchequer..... ultimately , these farmers have to go away and replaced by the corporate farming..... sooner the better , Pakistan , specifically, Punjab is heading towards it.

That is great for the elites who already own thousands of acres or have the capital to do so. What about the small farmers ? Not only will all of them lose their land, but most won't even get employment as farmhands because modern corporate farming is far less labour intensive. They will be reduced to a condition worse than medieval serfdom.

 

[muz]

Another shortsighted decision by 1000 iq God complex generals should have taken it after consulting the farmers but instead they went the usual My way or the Highway route
In the coming years food prices will be unpredictable especially for staple crops

 

[SoulSpokesman]

@Owaiz sb

On "average", the Indian economy might be better off if small farmers are thrown under the bus and Indian industry gets better access to American markets, but it would be a far more unequal economy, with a few industrialists reaping most of the benefits and hundreds of millions losing their livelihoods.

Spot on, sir! Had our small farmers and agri labourers been skilled enough (partly through years of government supported healthcare, education, nutrition and sanitation) to shift to non-agri sectors, it would be a sacrifice worth making. But they are not! India removing agro tariffs especially on grains and dairy means throwing 100 of millions of folks into utter poverty and dependence and risking a social revolution. Not worth it.

Regards

 

[SoulSpokesman]

@Owaiz sb @mythbuster

Actually, Pakistan maybe in a better position to open its agri markets to open competition and even risk a devastation of its small farmers. Because the numbers of families that will be affected both in % and in absolute numbers will be much smaller than in India.

The only question is where do you re deploy them?

Regards