Pakistan – Afghanistan’s Unreliable Breadbasket, by Mohammad Samim

Pakistan – Afghanistan’s Unreliable Breadbasket, by Mohammad Samim

August 01, 2016

Pakistan accounts for nearly half of Afghanistan’s wheat and flour imports. That’s bad news for Kabul.

 Afghanistan spends hundreds of millions of dollars each year in importing wheat and wheat flour from Central Asia and Pakistan to meet its excess demand. Mostly used in flatbread, wheat is an important staple food in Afghanistan, accounting for about 60 percent of the daily caloric intake of the population. Although wheat constitutes about 70 percent of the cultivated land area and a quarter of agricultural GDP, domestic production does not meet national demand. According to the U.S. Department of Agriculture, Afghanistan’s wheat consumption is estimated to be 7.5 million metric tons for the period 2016-2017. Of this total, Afghanistan imports about 30 percent, primarily from Pakistan and Central Asia, to meet its deficit.

Because Pakistan accounts for almost half of the wheat and wheat flour imported into Afghanistan, Pakistan’s agricultural policies have a direct effect on Afghan food security. Pakistan occasionally disturbs the wheat market through domestic policies designed to meet the procurement target of Provincial Food Departments(PFDs), thus restricting wheat movements from surplus areas to millers. These policies cause inconsistent supplies and price shocks in Afghan wheat markets—in 2008, for example, Pakistan totally banned wheat and flour exports to Afghanistan. Furthermore, due to extended storage times in Pakistan, wheat stocks lose quality and it is a common practice to dump old stocks to the Afghan market. Afghanistan has no quality control on wheat and flour, meaning that grade 2 and 3 flour from Pakistan is considered standard or even grade 1 in Afghanistan.

The Pakistani government buys several million tons of wheat per year and subsidizes its allocation to mills on a quota system, encouraging movement of flour rather than wheat into Afghanistan. These mills are strategicallylocated in provinces near the Afghan border. Although Pakistan’s milling subsidies may be in favor of Afghan consumers, it harms Afghan producers and flour industry, pushing them out of business, preventing Afghanistan from achieving self-sufficiency.

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Beyond the restrictive trade policies of the Pakistani government, tensions usually prevail on the Durand linebetween the two countries, which has led to the closing the Torkham gate for weeks and cost Afghan traders millions of dollars. The border closing also causes fluctuations in wheat supplies to Afghanistan. Since the Afghan government does not hold significant wheat stocks, the price shocks impose severe hardships on the poor. Also, Pakistan’s non-cooperative behavior in fighting terrorism has caused Afghan consumers to boycottPakistani goods, including wheat flour. They have switched to wheat from Central Asia instead. These factors make Pakistan an unattractive wheat source for Afghanistan and encourage Afghanistan to allocate more resources into alternatives.

Now that Chabahar port has opened a transit route to Afghanistan and Central Asia, India can replace Pakistan in exporting wheat and flour to Afghanistan. The strong and friendly bilateral relations between India and Afghanistan and India’s huge wheat surplus make it a good candidate for wheat imports.

Another alternative, to boost wheat supply in Afghanistan, is to run a national campaign to intensify per unit wheat production by providing high quality inputs and other production technologies to farmers. However, research shows that increasing domestic production, per se, without market integration between rural and urban areas does not help much to achieve self-sufficiency. With the bumper wheat harvest in 2009 Afghanistan was close to self-sufficiency, but large cities still relied on imported wheat and flour. Market integration highly depends both on the flow of market information and on building roads so that commodities can flow easily from rural areas to cities.

Much of the 2,400 kilometer Ring Road now lies in ruins. This road connects major cities in Afghanistan, including Kabul, Balkh, Faryab, Badghis, Herat, Farah, and Kandahar. Around 60 percent of the country’s cultivated agricultural land lies within 50 kilometers of the Ring Road. Diverting funds to further refurbishing the Ring Road would prevent severe disruption of trade and transport within Afghanistan, linking agricultural producers and products to markets.

Seeking long-run solutions for self-sufficiency, Afghanistan can also bring deserts to life. Vast deserts in close proximity to the Ring Road can be cultivated using central-pivot irrigation systems. Central-pivot irrigation, albeit capital-intensive, is efficient in using limited resources of water. The flat desert topography in Afghanistan guarantees long distance irrigation and large-scale production of crops. Production then can easily be transported to urban areas using the Ring Road. Of course, comprehensive research on soil chemistry, water availability, and water tables is required.

Domestic production volatility coupled with price spikes in exporting countries leads to unstable wheat and flour markets in Afghanistan. To manage delays in wheat supplies and prevent price volatility that directly affects the poor—as wheat accounts for most of their daily caloric intake—Afghanistan needs considerable investment in milling and optimal storage facilities. To encourage investments in the wheat sector, the government should consider stock policies and also the privatization of silos and mills, as currently the existing wheat silos are not efficiently utilized.

As per FEWS NET,  the Famine Early Warning Systems Network, minimizing post-harvest grain losses by adopting effective post-harvest management techniques will help in reducing the impact of Pakistani wheat policies on Afghan food security. Afghan government sources report as much as 15 percent accumulative post-harvest cereal losses. A considerable fraction of losses appears to be due to poor storage methods. Promoting the usage of Purdue Improved Crop Storage (PICS) bags is a viable option and would reduce the post-harvest losses and help in maintaining quality wheat grains. Reducing post-harvest losses by three percentage points would guarantee the availability of an additional 75,000-100,000 tons of cereals for human consumption.

In short, Afghanistan needs to take a holistic approach from seeking more reliable external wheat sources—to meet the excess demand in the short run—to undertaking programs which lead to self-sufficiency in the long-run. The government needs also to adopt feasible ways of post-harvest management and seek investments in wheat stocks to manage the demand volatilities and seasonal price shocks in wheat and flour markets.

Mohammad Samim is an Afghan Fulbright scholar and a graduate student, studying agricultural business & economics at Auburn University. He tweets at @samimshs.

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