54% increase in the food import bill of Pakistan during last financial year

 Pakistan's food import bill reached to $8.348 billion from $5.42 billion 

The food import bill continue to rise due to the crisis in agriculture sector in Pakistan. Pakistan not only importing food products to meet the domestic demand but other agriculture products like cotton has seen a drastic fall in the production. Pakistan was use to export cotton and other agriculture produce not long ago. But in last few years, major crops have seen decline in the production. 

Pakistan’s food import bill grew by whopping 54% to $8.347 billion year-on-year during the previous fiscal year 2020-21 against the $5.42 billion in 2020. The increase was mainly due to sugar, wheat, palm and Soybean oil and pulses imports to bridge the shortfall in domestic production of agriculture produce.

This 54% rise in spending on food imports could have been contained to some extent, had the government aptly handled the wheat and sugar shortages – and had some important substitution policies been in place.

The rising food import bill has widened the trade deficit that was already on rise. As the economy picked up some speed and recovering from crisis caused by COVID-19 pandemic, the imports started to rise. 

Pakistan’s merchandise trade deficit widened by 32.9 per cent, or $7.616 billion, in the outgoing fiscal year (FY 21) from a year ago on the back of lower export proceeds and higher than expected imports, data shared by the Ministry of Commerce showed on Thursday.

The annual trade deficit reached $30.796 billion in July-June FY 21 from $23.180 billion over the corresponding period of last year. This may pose some challenges for the government in controlling external accounts.In rupee terms, the trade deficit was posted at 33.8%  on a year-on-year basis. 

The trade deficit has almost reached to the levels of August 2018 when PTI government take power. The total import bill inched up by 26.60% to $56.405 billion in last fiscal year as against $44.552 billion over the corresponding period of last year.  

The monthly deficit reached $3.333 billion  in June 2021 from $2.120 billion a year ago, reflecting an increase of 57.2%. In rupee terms, the trade deficit was posted at 50.5% on a year-on-year basis. In FY 20, the country’s trade deficit had narrowed to $23.099 billion from $31.820 billion in the previous year.  

According to the data compiled by Pakistan Bureau of Statistics (PBS) showed the share of food items in the total import bill reached 14.79 % this year, compared to 12.17% last year. This is a clear indication that our reliance is growing on the imported food to ensure the food security in the country.

Instead of increasing our agriculture produce to meet the growing domestic demand and policy makers are looking for easy alternates. the import of food is the easy way to meet the demand. 

Import of palm oil recorded a growth of 44.91% in value in FY 21 to $2.668 billion from $1.841 billion over the corresponding months of last year. In quantity, 7.64% growth was recorded in import of palm oil during the same period. The palm oil bill increased due to rise in international price of palm oil.

As a result, the prices of vegetable ghee and cooking oil posted growth during the last few months for domestic users. The import of Soya bean oil rose by 65.98% in value and 38.33% in quantity.

Pakistan has imported 3.612 million tonnes of wheat worth $983.326 million in nine months of last fiscal year as against no imports in the previous financial year. As no wheat has been imported in the months of April, May and June with the authorities expecting a bumper wheat crop, the ECC decided to import 03 million tonnes for keeping buffer stock. It will now be imported in the current fiscal year.

Similarly, the import of sugar stood at 281,329 tonnes during 2020-21 as against 7,609 tonnes over the corresponding months of 2019-20, showing an increase of 3,597%.

Import of tea posted growth of 8.96% during the previous fiscal year while that of spices increased by 29.31%. The growth is mainly due to a drop in import of these products under transit trade and controlling of smuggling at border areas.

The import bill for pulses, dried fruits, milk and other food products witnessed a massive growth during the period under review. The import of all other food items spiked 34.16% on a year-on-year basis to $2.686 billion and pulses 15.48% to $709.729 billion.

                                                                   Khalid Bhatti 

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