Government likely to fix wheat price at Rs 424 per 40kg

The government is likely to fix issue price of wheat at Rs 424 per 40 kg for 2005-06 for the time being, besides authorising Ministry of Food, Agriculture and Livestock (Minfal) to review it periodically in consultations with the provinces. "We have recommended to the ECC that issue price of wheat may be fixed at Rs 424 per 40 kg which will be adjusted in accordance with market conditions," an official of Minfal told Business Recorder.
The Economic Co-ordination Committee (ECC) of the Cabinet is scheduled to meet on Monday in which the issue of wheat issue price would also be considered.
Minfal in its summary has admitted that the cascading price of wheat was Rs 30 to Rs 48 higher than the procurement price of Rs 400 per 40 kg.
According to sources, release of wheat from government stocks at less than the market rates would help in reducing wheat and wheat flour prices in the market.
"The incidental costs for the current wheat crop are considerably higher than those of last year, primarily because of significant increase in interest rates from the banking system. Such costs ranged from Rs 40 to 45 per 40 kg in Punjab and Sindh," sources said.
They said that Minfal has decided that the issue price for wheat may be fixed on the basis of following considerations:
a) Impact on inflation.
b) As it may not be possible to fully absorb the costs of procurement / storage/financial and other incidental costs within the issue price, some differential may have to be picked by the provincial governments.
c) Issue price should be such which should discourage hoarding by profiteers. Rather, it should aim to bring the hoarded wheat into the market.
d) It should not serve as a disincentive for the import of wheat by the private sector. The private sector is showing keen interest in import. The imported wheat would be available at Rs 400 per 40 kg in the wholesale market.
e) It would be less than the price prevailing in the market, which presently is about Rs 440 per 40 kg.
Sources said that ECC is likely to direct the provinces to resort to issuance of wheat from their stocks to flour mills which are operational and are marketing wheat flour.
Sindh food department will be asked to release the remaining 12,500 tons wheat into the drought affected people of Sindh at Rs 400 per 40 kg or new issue price if fixed earlier than issuance of the remaining quantity.