World Bank, in collaboration with other partners, is crafting a series of Just-in-Time (JIT) Policy Notes to address urgent concerns regarding agriculture and food security in Pakistan and propose short and medium-term enhancements.
The ‘Just-in-Time Policy Note on Agriculture and Food in Pakistan’ highlights that food inflation and instability in Pakistan stem from inadequate policies and regulations distorting markets, hindering competition, and deterring private investment. Additionally, limited and poorly executed efforts for research, innovation, and technology dissemination exacerbate these issues.
Pakistan has grappled with both high food inflation and price volatility in recent years, emphasizing the necessity to fortify its food system. Factors such as uncompetitive market conditions and market failures contribute to suboptimal outcomes, impacting both affordability and availability of a nutritious diet for 68% of the population, as per a recent FAO report.
Insufficient productivity, market distortions, and trade limitations exacerbate market rigidities, impeding price stability. Despite a growing population, productivity improvements remain stagnant, barely meeting the country’s demand requirements.
Food price inflation, historically driven by supply constraints, is compounded by market fragmentation, information asymmetry, and non-market factors like pandemics or climate change.
Recommendations:
- Gradually reduce government involvement in wheat procurement, adjusting support prices to market levels to prevent market panic.
- Ease import tariffs and barriers in the sugar industry to foster competition and enhance capacity.
- Promote high-value agriculture (HVA) through research, extension services, and removal of policies discouraging private sector engagement in value chain modernization.
- Enhance institutional capacity and infrastructure for trade facilitation, including timely testing and certification services.
- Strengthen linkages to global markets and maintain standing import arrangements with non-traditional suppliers.
- Discontinue price capping of milk and meat by the L&DD to alleviate pressure on farmers.
- Develop a unified platform for federal and provincial governments to monitor the food system, enhancing farmers’ access to market information for informed decision-making.
These recommendations collectively contribute to fortifying the food system by addressing information asymmetry, promoting high-value crops, encouraging private sector participation based on performance, prioritizing research and development, and employing targeted social protection tools instead of blanket subsidies.