Development of Supply and Demand Functions of Pakistan’s Wheat Crop

A simultaneous-equations model was used to capture the supply anddemand functions for Pakistan’s wheat sector at the national level. Thismodel reflects the fact that Pakistan’s domestic wheat supply is priceresponsiveand positively affected by the use of nutrient fertilizers. Whileprice appears to be a statistically significant factor on the supply side, it isstatistically insignificant on the demand side. Population size appears to bevery significant in determining wheat demand. The wheat import supplyseems to be influenced by the current world wheat price, current worldwheat supplies, Pakistan’s domestic consumption in previous years, anddomestic supply in previous years. We recommend that policymakers allowmarket forces to play a role in the wheat economy in a way that protectsproducers from adverse market conditions. The availability of variousnutrient fertilizers should be central to policies on future inputs use. Workis also needed on wheat alternatives so that the country’s dependence onwheat is eased as much as possible.