MALNUTRITION: PAKISTAN: How will the global wheat market react to the floods?

20 August 2010 (IRIN) - Pakistan's wheat production in 2011 would need to halve before it caused ripples in the global market, but it is still too early to predict the output, says a leading economist and grains expert. Abdolreza Abbassian, secretary of the Intergovernmental Group on Grains at the UN Food and Agriculture Organization (FAO), spoke to IRIN about the possible impact of Pakistan's grain output in 2011 on the already volatile global wheat market. Wheat prices have doubled in the last two months after a drought and fires in Russia, one of the top five exporters. The price shot up on 19 August from US$241 per metric tonne to $250 as news spread that Russia might need to import wheat, which the Russian government has since denied. Wheat is the staple grain in Pakistan, a net exporter since 2000, mostly to neighbouring Afghanistan. Abbassian said Pakistan consumed about 21 million tonnes of wheat a year. The country had two consecutive bumper harvests of around 24 million tonnes in 2008/09, and again in 2009/10. "Fortunately, there is no problem this year, as the wheat had been harvested and stored - if Pakistan's wheat crops had been affected, then, with the situation in Russia, we could have had a crisis," Abbassian commented. The country also imports about a million tones each year, but this does not affect the market. Pakistan's main wheat-growing area lies in the eastern province of Punjab, which produces 16 to 17 million tonnes of wheat and is one of the areas affected by the floods. Farmers will plant their next crop in October. "The wheat in Punjab is mostly irrigated, and we don't know the extent of the damage to the infrastructure and to seeds stored by farmers," said Liliana Balbi, a senior economist at the FAO Global Information and Early Warning System. "We will only know when the water recedes." The loss of draught animals could also affect ploughing for the planting season. Around 200,000 cows, sheep, buffalo, goats and donkeys are dead or missing, "but the final numbers will be much higher, possibly in the millions," said FAO. The national livestock population, including poultry, was estimated at 217 million in 2006. Pakistan's government buys the wheat at fixed prices through federal and provincial organizations for use as strategic and operational food reserves, and to provide wheat flour to the general population at stable prices, according FAO. "Nationally, the position is OK, but we understand farmers' individual reserves have been washed away or damaged, so there could be localized food insecurity," said Balbi. "What we do know, so far, is that at least 3.2 million hectares of standing crops, including rice, maize, cotton, sugar cane, fruit orchards and vegetables, have been damaged or lost to the floods - this represents some 14 percent of the total cropped area." Abid Suleri, who heads the Islamabad-based Sustainable Development Policy Institute, said "food security would be a major issue, not only in flood-affected areas but also in major cities, especially in Karachi, which is dependent on food supplies from upper Sindh, Punjab and Pakhtunkhwa [provinces]." Suleri, who had just returned from a rapid assessment of the flooding, said the loss of civil infrastructure was disrupting the supply of food to Karachi, Pakistan's largest city and its financial hub, and capital of Sindh Province in the south. Some of the districts deluged by the floods in Punjab and the northwestern province of Khyber Pakhtunkhwa are already the most food insecure, and also those most affected by militancy, he said. Food insecurity levels will inevitably soar in the aftermath of the floods, making people even more vulnerable.