Another IMF Condition Met: Govt Exits Wheat Procurement

[kambhakt]

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.

This is not about Pakistan importing agricultural products but about Pakistan government stopping purchase of agricultural products beyond its strategic requirements.

The Pakistani farmers will now have to sell in the market and not rely on the government to give them a minimum price.

And the government will be maintaining stock that it determines is required for strategic consideration.

 

[mythbuster]

@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

Maju , in my home district 90% of farmland , own by small farmers , is not being cultivated....my ancestral farmland is now a jungle.

 

[SoulSpokesman]

@mythbuster

Blum Pai, That is why I thought Pakistan could actually implement it. Because the number of people that would be affected would be manageable.

my ancestral farmland is now a jungle.

I am sure you make good use of this jungle....

Regards

 

[Owaiz]

@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

It is not just a question of skill. All countries in the world face the same problem. Large scale agriculture and increasingly robotised industry are both not in a position to absorb displaced small farmers. Even white collar jobs are being replaced by AI. So, the only options available to these people are begging, menial service jobs like maids or servants of the rich or crime. While all countries face this problem, it is particularly acute for those like India and Pakistan where agriculture supports a large part of the labour force.

 

[Owaiz]

This is not about Pakistan importing agricultural products but about Pakistan government stopping purchase of agricultural products beyond its strategic requirements.

The Pakistani farmers will now have to sell in the market and not rely on the government to give them a minimum price.

And the government will be maintaining stock that it determines is required for strategic consideration.

The governmet has already committed to 0 duty on American farm products from the next fiscal year. This latest move is just another blow for farmers.

 

[mythbuster]

@mythbuster

Blum Pai, That is why I thought Pakistan could actually implement it. Because the number of people that would be affected would be manageable.

my ancestral farmland is now a jungle.

I am sure you make good use of this jungle....

Regards

Yep , jungle ( pine trees) is worth more than 50 millions .

 

[SoulSpokesman]

Blum Pai, I am sure you put your jungle to more uses than just growing pines.

On a more serious note, I wish IND-PAK relations were more relaxed and I could visit Pakistan and enjoy the hospitality of your feudal manor.

Regards

 

[mythbuster]

Blum Pai, I am sure you put your jungle to more uses than just growing pines.

On a more serious note, I wish IND-PAK relations were more relaxed and I could visit Pakistan and enjoy the hospitality of your feudal manor.

Regards

I am no feudal bro but you are welcome anytime.

 

[Michael]

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.

Some people don't understand this issue. I'm using your perspective to further guide people in analyzing this problem in more detail.

Please pay attention to the specific details of wheat production in countries such as the United States, China, India, and Pakistan:
1. Yield per unit area. How much wheat is produced per hectare? This is related to factors such as agricultural science (crop genetic engineering, fertilizers and irrigation, etc.) and land conditions.
2. The ratio of farmers to wheat output. How much wheat does each farmer produce on average? This is related to the degree of agricultural mechanization.
This data can be obtained through AI.

If the wheat market were completely liberalized, the landed price of wheat imported by India/Pakistan from other agriculturally advanced countries could be significantly lower than the production costs of their own farmers.

What consequences will this have?

As for national strategic reserves, I would say this is not an economic issue. From an economic perspective, national grain reserves are a project that incurs absolutely huge losses.

 

[friday]

anyone can explain what would be the effects on farmers crop for upcoming wheat season?

 

[ST1976]

The IMF supports food security in vulnerable countries through financial aid, notably via its Food Shock Window (FSW) under emergency financing (like the Rapid Credit Facility) for urgent balance of payments needs from food crises, plus regular programs (like PRGT) with policy advice on social safety nets and resilience. Key beneficiaries include countries hit by price shocks (e.g., Guinea, Malawi, Ukraine, Haiti), providing funds for food-related issues, working with partners like the World Bank.

How the IMF Helps

1. Emergency Financing (Food Shock Window - FSW):
   • Created in response to the 2022 food price spikes (exacerbated by the Ukraine war).
   • Offers quick access to funds for countries facing severe food-related economic shocks.
   • Examples: Provided aid to Guinea (for food and fuel shocks), Malawi, Ukraine, Haiti.
2. Policy Advice & Capacity Building:
   • Offers guidance to strengthen social safety nets and food systems.
   • Works with other organizations (World Bank, WFP, FAO) for a coordinated response.
3. Poverty Reduction and Growth Trust (PRGT):
   • Provides concessional (low-cost) financing to low-income countries, crucial for long-term resilience.

Who Benefits?

• Low-income countries facing balance of payments issues due to rising food/fertilizer costs, conflict, or other shocks.
• Countries with weak institutions or fragile socio-political environments are most vulnerable.

Key Focus Areas

• Protecting vulnerable households.
• Building resilient agricultural production.
• Enhancing food system preparedness.

In Summary: The IMF offers a mix of emergency and longer-term financial tools, backed by policy support, to help nations manage immediate food crises and build stronger food systems, often in collaboration with global partners.

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[Kambojaric]

I am always skeptical of privatizing key state functions. I am all for privatizing luxury items like air travel which are consumed by a certain level of society but when basic necessities like food are involved the power dynamics shift.

A corporation which owes zero accountability to the poorer classes will almost always be able to wield greater political power than their consumers. The US is a great example of this. The worlds richest country but the majority of the bread it produces is of low quality to say the least.

At the end of the day beggars can't be choosers but this one will in my opinion almost certainly turn out bad in the long run whereas the PIA one there are positives.

* I know this guy is quite melodramatic but this video is relevant to the topic

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[Michael]

I am always skeptical of privatizing key state functions. I am all for privatizing luxury items like air travel which are consumed by a certain level of society but when basic necessities like food are involved the power dynamics shift.

A corporation which owes zero accountability to the poorer classes will almost always be able to wield greater political power than their consumers. The US is a great example of this. The worlds richest country but the majority of the bread it produces is of low quality to say the least.

I fully support your point of view. The government must intervene and regulate the daily necessities of ordinary citizens to prevent excessive marketization.
Private enterprises prioritize economic interests and do not consider overall social balance.
========================================
China has a national grain reserve system, managed by the China Grain Reserves Group Co., Ltd. on behalf of the central government, in conjunction with grain depots at various levels of local government, to ensure China's food security.

They have a safe price range for grain. When market grain prices are within this range, everything operates according to market prices. When market grain prices fall below the safe price range, they will widely purchase grain at the safe price to ensure that farmers do not suffer losses due to excessively low grain prices. When market grain prices exceed the safe price range, they will sell large quantities of grain at the safe price to ensure that ordinary citizens can afford food.
If private companies were to manage these grain reserves, they would make completely different decisions driven by profit motives.

China's national grain reserves are currently at their highest level. In extreme circumstances (without importing or producing any grain), there is enough grain to feed 1.4 billion Chinese people for more than a year.

 

[dabbu]

Doesn't this impact like millions of farmers mainly in Punjab, the wheat belt?

One would assume they would very aggressively protest this, like the Indian farmers that made even Modi back down.

 

[Meengla]

@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

Right.
I tend to think thus: Improve the utilization of water resources and retain as many smaller farms as possible. Not everything should be about nickle-and-dime. There is beauty in rural life, in smaller communities, in the old charms.
There are other ways for nations to make money. I tend to think more along the Bhutan way of thinking: Happiness above crass capitalism.