"[There] was absolutely no need to continue the ration system to 1980s, and yet it continued. But for the IFPRI’s study, it may have continued even now."
- Dr. Zafur Altaf, Secretary of Pakistan's Ministry of Food and Agriculture, Food Policy in the Dynamics of Global Agriculture, a documentary video by AGCOM International.
MOTIVATION
Wheat is the staple food for the vast majority of Pakistan’s population, contributing almost 50 percent of total calories in the average person’s diet in the 1980s. The government of Pakistan has traditionally played a significant role in the marketing, trading, and storing of wheat. In the late 1980s, IFPRI conducted several studies on Pakistan’s wheat policy to assist the government in reducing its costly intervention in the wheat market.
One of the most important studies focused on the wheat rationing system in Pakistan, established well before independence in 1947. This system provided poor households with subsidized wheat as a response to shortages. By the 1980s, the program had degenerated into what was a wasteful and corrupt system that failed to reach the poor. At the request of the government of Pakistan, IFPRI assessed whether the program benefited the poor and whether the poor would be adversely affected by the elimination of ration shops.
RESEARCH RESULT
Drawing on data from a national urban survey, IFPRI, in collaboration with the Pakistan Institute of Development Economics (PIDE), provided conclusive evidence of the program’s failure to reach the poor. The research showed that between 64 and 72 percent of the 3.1 million wheat released for sale was not purchased by consumers from the ration shops. The use of the ration shops had been in decline since 1977. In fact, only 19 percent of the population in cities and 5 percent of the population in rural areas, where a majority of the poor lived, used the ration shops.
In 1989, IFPRI conducted another study on Pakistan’s wheat storage found that efforts to stabilize wheat supplies by holding stocks of the grain for multiple years turned out to cost more money than it saved. Recently, IFPRI researchers also conducted a study on Pakistan wheat procurement, sales, and trade policies. The analysis indicated that when the government sets the guaranteed price it buys wheat too high relative to the price at which it sells wheat, it has high costs to the government with little or no benefit to consumers. The practice also discouraged small farmers from selling to government agencies.
OUTCOMES
- In 1986, MINFA and the prime minister’s office prepared a summary paper using IFPRI’s findings and surveys on the wheat ration shop issue. The paper was presented to the cabinet of Pakistan. In February 1987, the Government of Pakistan announced its decision to abolish the wheat ration shop system. IFPRI’s research facilitated this decision by providing a clear and quantified justification for eliminating the ration shops.
- According to a 1991 evaluation report conducted by the Winrock International Institute for Agricultural Development, IFPRI’s analysis contributed to the Pakistani Government’s decision to adjust wheat procurement, change the release prices to reduce subsidies, and encourage private-sector participation in managing the wheat storage system. Furthermore, as a result of this research, the government decided not to borrow funds from the Asian Development Bank to build grain storage facilities.
- An impact study estimated that IFPRI’s research, from 1986 to 1991, resulted in over US$200 million in savings for the government of Pakistan compared to the research investment of US$6 million.
For more on the outcomes of IFPRI's work in Pakistan, go to the booklet.
