Wheat support price may be raised to Rs 1150/40 kg

ABDUL RASHEED AZAD

ISLAMABAD: The government is likely to increase wheat support price by Rs 200 per 40 kg from Rs 950 per 40 kg to Rs 1150 per 40 kg due to rising inputs cost, officials said.

They told Business Recorder that during the past three years prices of important inputs including urea, DAP fertilizers and diesel have increased manifold. Consequently, wheat cultivation at present price is no more profitable for the farmers. They added that farmers were requesting the government to increase the commodity price by at least Rs 200 per 40 kg and the government is likely to consider their demand.

An official in the newly created Ministry of Food Security said that the government should consider food versus energy parity while fixing new wheat support price as in 1970s one barrel of crude oil was available at 28 bushels of wheat (a bushel is equal to 28.5 kg), which in 1990’s reduced to one barrel of crude equivalent to 14 bushels of wheat and at present one barrel of crude oil is equal to 11 bushels of wheat. This shows that over the years food versus energy parity has sharply declined and value of food has significantly increased over the past 40 years, he added.

During last three years wheat prices increased by 46 percent from Rs 650 per 40 kg to Rs 950 per 40 kg, but cost of production has increased by 100-300 percent. Urea prices increased 140 percent from Rs 740 per 50 kg bag to Rs 1800 per 50 kg bag. DAP prices increased 281.81 percent from Rs 1100 to Rs 4200 per 50 kg bag. Pesticide prices increased 140.90 percent from Rs 110 to Rs 265 per bottle. Electricity prices per unit increased 116.6 percent from Rs 3 to Rs 6.5 per unit for agricultural sector. Diesel prices increased by 30.55 percent from Rs 72 to Rs 94  per litre and seed prices increased by 90 percent from Rs 1000 per 50 kg bag to Rs 1900 per 50 kg bag.

“Under the prevailing conditions the government has limited choice it could save 63 percent rural population by increasing wheat support price or 37 percent urban masses by maintaining current wheat support price” the official added.

If the government is increasing the wheat support price by Rs 200 per 40 kg, wheat flour price would be increased by Rs 6 per kg. Resultantly, millions of more people in urban areas would become food insecure, a food security analyst said.

Pakistan in 2010-11 produced over 25 million tons of wheat; in 2009-10 it produced 24 million tons of the commodity; and in 2008-09 it produced nearly 23 million tons of wheat.

He said that Pakistani farmers are getting much lower price of their crop as compared to the cost of production, which stands at Rs 905.50 per 40 kg, while government announced wheat support price is Rs 950 per 40 kg.

The government is expecting 25 million tons of wheat in 2011-12. Out of this, Punjab will produce 19 million tons, KP 1.5 million tons, Balochistan 0.8 million tons and Sindh will come with 3.8 million tons.

Ibrahim Mughal, Chairman of Agri-Forum Pakistan, told Business Recorder that the Prime Minister has in principle, shown his consent to increase wheat support price by Rs 200 per 40 kg. Farmers use 21.5 million acres land under wheat cultivation. If government announces wheat price at Rs 1150 per 40 kg then production can be increased by 2 to 2.5 million tons, which would enable farmers to bear increased inputs cost.

Total 130 million bags of urea are used by agricultural sector, out of which 40-45 million bags are used for wheat. DAP 35 million bags are used, out of which 20 million bags are used for wheat. Yield can be increased by increasing the fertilizer which contain maximum phosphorus which is DAP.

Price for imported urea has been announced by the government at Rs 1300 per 50 kg bag but unfortunately not only a single bag is delivered at this price to farmers as they are purchasing 50 kg urea bag at Rs 1800.

“If we compare Indian yield, wheat prices and cost of production with Pakistan, then figures speak louder than voice. Urea prices in India are equal to Rs 600 Pakistani rupees per 50 kg bag, DAP prices are equal to 1160 Pak Rs per 50 kg bag and diesel prices are equal to 74 Pak Rs per litre and after all these inputs their buying price from former is equal to Pak Rs 1000 per maund. India is providing 812 billion rupees as subsidy to agricultural sector” Ibahim said.