Decomposition Analysis of Wheat Growth and Its Policy Implications in Pakistan

Abstract

Wheat is an incredibly political crop because of its inelastic demand in Pakistan. Wheat accounts for almost 50 percent calorie intake in the country with a relatively greater share in total calorie intake in rural areas of the country. Despite the sensitivity of this crop, it is always challenged by various factors like climate change along with other economic and political influences make it difficult to meet the nutrient requirement of the rapidly growing population. For a better-informed policy framework, it is necessary to study the previous patterns of growth of the wheat crop and its contributing factors to formulate more vigorous growth targets of the wheat crop in the future. For this purpose, we decomposed wheat growth into the area, yield and their joint effect from 1947 to 2016 both overall and decade wise to study any structural breakdown overtime. The results of the decomposition analysis reveal that the area contribution of wheat remained 35 percent while yield contribution was 61 percent. The same is the case in decade wise analysis which reveals that in future yield can be increased by adopting favourable policies to harness the yield potential of wheat in the country.