Economic Competitiveness of Wheat Production under Alternative Policy Regimes: Evidence from Peshawar District, Pakistan

Abstract

Wheat is the most important staple crop in Pakistan and plays a critical role in ensuring food security, rural employment, and agricultural sustainability. Government interventions through price support mechanisms, input subsidies, and trade policies significantly influence wheat production decisions and farm profitability. This study evaluates the competitiveness, comparative advantage, and policy effects associated with wheat production in Peshawar District, Khyber Pakhtunkhwa, Pakistan. Primary data were collected from 120 wheat growers through a structured questionnaire. The Policy Analysis Matrix (PAM) framework was employed to estimate private and social profitability, Domestic Resource Cost Ratio (DRC), Social Benefit-Cost Ratio (SBC), Nominal Protection Coefficient (NPC), Effective Protection Coefficient (EPC), Producer Subsidy Equivalent (PSE), and Subsidy Ratio to Producer (SRP). Results indicate that wheat production generates a net private profit of Rs. 44,882.74 per acre, demonstrating strong competitiveness under prevailing market conditions. The estimated DRC (0.63) and SBC (1.37) under the import substitution regime confirm comparative advantage and efficient utilization of domestic resources. Conversely, wheat production lacks competitiveness under the export promotion regime, as reflected by a DRC of 1.51 and SBC of 0.79. The positive values of NPC, EPC, PSE, and SRP indicate substantial policy support and protection for wheat producers. The study concludes that wheat production is economically viable for domestic food security objectives but remains uncompetitive in international markets. Policies aimed at reducing production costs, enhancing productivity, and improving market efficiency are essential for strengthening competitiveness and increasing farm income.

Keywords- Wheat production, Policy Analysis Matrix, Comparative advantage, Agricultural policy, Competitiveness, Pakistan