Abstract:
A simultaneous-equations model was used to capture the supply and
demand functions for Pakistan’s wheat sector at the national level. This
model reflects the fact that Pakistan’s domestic wheat supply is priceresponsive
and positively affected by the use of nutrient fertilizers. While
price appears to be a statistically significant factor on the supply side, it is
statistically insignificant on the demand side. Population size appears to be
very significant in determining wheat demand. The wheat import supply
seems to be influenced by the current world wheat price, current world
wheat supplies, Pakistan’s domestic consumption in previous years, and
domestic supply in previous years. We recommend that policymakers allow
market forces to play a role in the wheat economy in a way that protects
producers from adverse market conditions. The availability of various
nutrient fertilizers should be central to policies on future inputs use. Work
is also needed on wheat alternatives so that the country’s dependence on
wheat is eased as much as possible.
