Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options

Paul Dorosh and Abdul Salam
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Paul Dorosh: World Bank, Washington, DC.
Abdul Salam: Federal Urdu University of Arts, Science and Technology, Islamabad.

The Pakistan Development Review, 2008, vol. 47, issue 1, pages 71-87

Abstract: This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on the overall consumer price index. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs.

Keywords: Food Policy; Food Price Stabilisation; Agricultural Policy; Food Price Inflation (search for similar items in EconPapers)
JEL-codes: Q11 Q18 (search for similar items in EconPapers)
Date: 2008
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