Reforming Federal Wheat Subsidy for Sustainable Food Security in Gilgit-Baltistan (GB)

The federal wheat subsidy, under the Civil Supply Act, was extended to GB in the 1970s as an important component of Pakistan’s social safety net, helping to protect the poor against food shortages in these remote areas. Since the establishment of this subsidy, no significant effort has been made to evaluate the efficacy, cost efficiency and positive or negative impacts of this program. Today, the federal government is under tremendous pressure from Pakistan’s creditors to remove or reduce this important lifeline. However, a sudden reduction of this subsidy, which has deeply distorted markets and altered food production systems in GB, will trigger a new crisis in this already volatile and vulnerable area. The recurring protests across GB against reducing this subsidy, without a sustainable alternative, is evidence that this system needs a careful review and restructuring.

The federal wheat subsidy is a lifeline for the region's vulnerable population. Yet, with the passage of time, the system's inefficiencies have become increasingly evident. The program costs PKR 8 billion annually, amounting to a subsidy of PKR 5,000 per capita or PKR 37,000 for a family of seven. While these numbers demonstrate the government's commitment, they also reveal a troubling lack of focus, with significant portions of the subsidy being siphoned off through corruption, leakage, and wastage. The need of the hour is to pivot from a general subsidy approach to a “food systems” approach, that is more comprehensive, targeted and efficient.

The first step is the creation of a provincial social registry, leveraging digital technology to identify and target households living below the poverty line. This registry can serve as a platform for various forms of social protection, ensuring subsidies reach those who truly need them. The introduction of technology, including a dedicated app, biometric identification of the beneficiaries, and digital channels for the delivery of cash transfers, will help improve the overall efficiency, transparency and benefits. By directly depositing funds into the beneficiaries' digital accounts, this system will reduce leakages, increase transparency, and provide immediate relief to families.

The second pillar of this approach is increased investment in local agriculture to enhance food security and reduce dependency on unreliable supply chains, stretching all the way from Punjab and Sindh provinces, and imports from war torn Ukraine. By bringing new land under cultivation and harnessing innovative agricultural technologies, GB can increase its productivity and self-reliance. Such initiatives will require a concerted effort in research and development, extension services, and infrastructure, such as irrigation systems, to make barren lands arable.

Following this ‘food system’ approach, diversifying the food supply and enhancing its nutritional value is another crucial step. A shift towards a more varied diet, incorporating local wheat, maize, buckwheat, potatoes; fruits, vegetables and nuts; fisheries, rural poultry and livestock, will not only improve nutrition but also bolster the local economy by reducing the reliance on imported wheat. The introduction of nutrition-sensitive agricultural practices can ensure that the agricultural expansion aligns with the region's health goals.

The private sector's role in delivering food through the market system is also essential. By incentivising local businesses and entrepreneurs, GB can create a robust food distribution network that operates efficiently and is driven by market forces. This federal wheat subsidy can supplemented with provincial programmes and rechanneled to support these private ventures in the form of subsidies and grants to village communities for land, water, and technology development, thereby stimulating economic growth and creating jobs.

Transforming the current federal subsidy into a mechanism that supports these initiatives can have a profound impact. It would mean that instead of a blanket PKR 8 billion expenditure, the funds would be strategically invested in targeted cash transfers, agricultural development, food diversification, and market-driven distribution systems.

In conclusion, the transformation of the wheat subsidy program in GB calls for a multi-pronged strategy that targets the vulnerable, leverages technology, invests in agricultural development, diversifies the food system, and incentivizes the private sector. By doing so, the subsidy will not only alleviate immediate poverty but will lay the foundation for a sustainable food security system that can stand the test of time and serve as a model for other regions facing similar challenges.

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