The war in Ukraine continues to send shockwaves around the globe. Russia’s invasion of Ukraine was a disaster foretold, yet there was little action on the part of most of the trading partners of these countries.
In spite of the fact that tensions had been simmering and continually escalating over the previous eight years, our modern, globalized world was unprepared for this century’s first full-blown conventional war between two major nations.
The conflict has disrupted global supply chains, jeopardizing food security in North Africa, South Asia and the Middle East.
This serves as a lesson for countries to review their trade profiles and critically evaluate risks of potential disruptions along various commodity lines and vis-à-vis various trading partners. And there is one import category where Pakistan bears sizable risk – food.
Palm oil is by far Pakistan’s largest agro-based import. However, given that Indonesia and Malaysia, two fairly stable neighboring nations, make up more than 85% of the world’s palm-oil production, there is not much in terms of trade-profile restructuring that Pakistan can do with this vital commodity to lower supply risks.
Wheat imports
The country’s second-largest food import is wheat. In 2020, Ukraine and Russia provided 50% and 40% of Pakistan’s shares of wheat imports respectively.
Despite being a sizable wheat producer itself, in recent years, Pakistan has sought to import wheat to build reserves, approving import deals from the increasingly diplomatically isolated Russia amid declining supplies from war-ravaged Ukraine.
Moreover, the country’s wheat production over the past decade has stagnated, because of erratic rainfall patterns and heatwaves that have been attributed, at least in no small part, to climate change.
Weather extremes, particularly unpredictable spells of droughts and floods, have ravaged the country’s agriculture. Further, lack of modernization and research, poor agro-economic policy regulation (lack of attractive support price and incentives), and an unreliable freight system have held back domestic wheat production.
While production is almost stagnant, the population of the country is growing at a nimble pace. Wheat is Pakistan’s largest food crop, providing more than 70% of the country’s total caloric intake.
Because of its managerial myopia, proclivity toward short-term escapist solutions to its systemic and structural shortcomings, incoherent policymaking, and perpetuation of an unstable dynamic crisis-and-bailout locus for its economy, Pakistan has gone from being a prominent exporter of wheat in 2011 to being a major importer within a decade.
It is crucial for the nation to secure a reliable source for imports of its staple food sources and other dietary essentials.
Pakistan recently approved a massive wheat purchase from Russia because of cost considerations against the backdrop of the destructive floods last year. However, with the iteration of such desperately frugal-opportunistic decisions, Pakistan is only adding to its instability, diplomatically alienating stable suppliers and missing out on opportunities to either develop reliable, lasting supply chains or its own production capacity.
Pakistan must act to build long-term resilience and set itself on a trajectory of attaining self-sufficiency in wheat production within this decade before climate change, financial burdens, and farmer discontent make it impossible to establish a stable agricultural system for the food crop.
Legume, meat imports
After palm oil and wheat, legumes are Pakistan’s biggest food import. The country is the third-largest importer of legumes in the world. Despite being moderately diversified, the origins of almost half of Pakistan’s legume imports are geopolitically or economically fragile nations.
In 2020, Russia was the largest import origin, affording a fifth of legume imports, while Uzbekistan, East Africa, Afghanistan, Myanmar, Iran and Ukraine made up roughly 9%, 8%, 7%, 5%, 1.7% and 1.3% of the total respectively.
However, despite their individual disruption risks, the fact that these nations are from different regions somewhat lowers the overall compound risk as it is relatively unlikely that more than one of these economies would simultaneously fail.
For soybeans, Pakistan’s imports are nearly evenly split between Brazil and the US, thus offering a well-complemented, stable profile.
Over the period of 2015-2020, wheat, soybeans and legumes were among Pakistan’s fastest-growing imports, according to data from the Observatory of Economic Complexity (OEC).
Pakistanis have a heavily animal-based diet, with meat, poultry, fish and eggs usually forming the bulk of each meal of the day. However, lack of modernization, poor breeding practices, inefficient and unsustainable expansion of traditional rearing facilities, disease, and market mismanagement have led to frequent shortages in meat supply in various parts of the country along with painfully ascendant prices.
Given considerations of economic, environmental, and supply sustainability, soybeans and other legumes could serve as increasingly important supplements to meat in the Pakistani diet, particularly for the poor. Some soybeans could be rededicated toward human consumption rather than being used as animal feed, thus enhancing food security and sustainability.
Tea imports
The next critical import is tea. Pakistan is the fourth-largest consumer and the largest importer of tea in the world. It is heavily dependent on imports to meet its tea demand.
Some 77% of Pakistan’s tea in 2020 was sourced from Kenya and a further 10% from Rwanda, Uganda, Burundi and Tanzania. Kenya has been Pakistan’s primary tea origin for decades.
In 2021, Kenya was placed 167th among 194 countries on the World Bank’s Political Stability Index. Kenya was deemed the 33rd most fragile state in the world out of the 179 nations assessed in 2022. It ranked 120th out of 163 nations assessed in the Global Peace Index of the think-tank Institute for Economics and Peace.
Violence is pervasive, ranging from intercommunity clashes to gang violence and banditry. Kenya’s polity is highly volatile and much of its political leadership is constituted by an apathetic, self-absorbed elite ruling class that has poor accountability and little concern for welfare.
Inequality, corruption, and disrupted development have led to widespread discontent among Kenyan citizens. The country’s promising economic potential has been incapacitated by stagnant infrastructure, violence, and absence of political will.
It is thus crucial for Pakistan to expand its tea import profile with partners beyond East and Southern Africa. Once a colonial cash crop in the South Asian subcontinent, tea came to be a vital beverage in Pakistan – it is an essential part of personal and social routines, a cultural centerpiece, a community adhesive, and a rare affordable and accessible respite from hardship for the workforce.
In June 2022, a senior minister’s suggestion that people in Pakistan should cut down on their daily tea consumption in order to help reduce the loan burden exerted on the unstable economy due to tea imports was met with widespread rebuke and ridicule. It would not be an overstatement to say that the assurance of a regular supply of tea is essential to the maintenance of social stability and general well-being in the country.
Tackling food insecurity
Food crops might not be Pakistan’s largest import category as measured by gross economic valuation, but they are the fastest-growing section of its trade profile and are critical to a developing nation where a fifth of the population is undernourished and millions face chronic hunger.
Pakistan’s high birth rate amid food insecurity translates to widespread child hunger and malnourishment. This is particularly dismaying considering that about 37% of the country’s workforce is employed in agriculture.
Pakistan needs holistic and consistent long-term planning that transcends political transition to ensure food security for its population. It needs to establish new supply chains with South America, North Africa and East Asia for key food-crop items or utilize existing ones across sister commodities, both to supplement existing imports and to act as a contingency or alternative in the future.
For example, it could expand its trade channel currently being used for soybean imports from Brazil and the US to include other legumes.
Instead of continuing with its crisis-response model, Pakistan must adopt a more pre-emptive approach to managing supply disruptions and deficiencies by integrating its trade planning with domestic developmental forecasting and multidimensional internal and external risk evaluation.
Foresighted policymaking that transcends administrative volatility coupled with regular trade review is needed to ensure that a diversified trade profile woven with reliable and streamlined supply chains acts as a flexible, tenacious, and pervasive safety net for the crisis-ridden country as it walks its vacillating tightrope of development.