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ISLAMABAD: A Senate panel was informed on Thursday that the Economic Coordination Committee (ECC) of the Cabinet is likely to approve the uniform minimum support price of wheat today (Friday) based on recommendations of the federal as well as provincial governments.

Senior officials of the Ministry of National Food Security and Research briefed the committee about the steps taken to evolve a uniform minimum support price of wheat for Rabi season 2022. The panel was chaired by Senator Syed Muzafar Hussain Shah.

The committee was informed that the ministry, on the basis of the recommendation of the said ministry and provincial governments, has forwarded the summary to the ECC, which may approve it today (Friday), if the meeting takes place.

The committee directed the ministry to expedite the process of fixing uniform support price for wheat because the sowing season in Sindh has already started.

The panel was further informed that the provincial cabinet of Punjab has announced the support price of wheat at Rs3,000/40kg, but the governments of Khyber-Pakhtunkhwa and Balochistan have not announced till date. It was told that the provincial cabinet of Sindh on September 11 had announced the support price of wheat at Rs4,000/40kg. A cabinet committee met with CM Sindh with the request to review the minimum support price. However, no feedback has so far been received, the officials said.

Federal govt to announce wheat MSP next month

The officials warned that the recommendation of the Sindh government is expected to have multi-dimensional effects and is likely to increase food inflation and PASSCO may not be able to procure wheat from Sindh, while other provinces may impose a ban on the movement of wheat across borders.

They added that growers and middleman will use the price disparity among provinces to distort the market and hoarding and smuggling is likely to occur. Keeping an abnormally high price would also have an adverse impact on the finances and subsidies of federal and provincial governments. Hence, a reasonably high-profit margin, keeping in view the flood situation would be the most prudent course of action to incentivise the next wheat crop, they added.

The officials further stated that this year wheat production contributing factors will determine the wheat production and productivity level. These factors include profitable wheat support price, high moisture content, traceability of certified wheat seed, availability of subsidised wheat seed, availability of fertiliser (Urea and DAP), weather pattern, and wheat pricing trend.

For this year, it was planned that the federal government will announce the minimum support price for wheat crop before the start of the sowing season. For this reason, the Agriculture Policy Institute (API) was assigned to evaluate the cost of production of wheat crop and API’s estimates indicate that cost of production of an average farmer is at Rs2,495 per 40kg as compared to Rs2,427/40kg of a progressive farmer.

The officials said that the proposal was discussed in the first meeting of the Wheat Board, headed by the Minister for NFS&R on June 30, 2022. Provincial governments were committed to providing their provincial cabinets’ endorsement within two weeks. The provincial governments’ proposals were range between Rs2,600 per 40kg to Rs3,000 per 40kg. The National Assembly Standing Committee on NFS&R in its meeting on July 15, 2022, recommended the provinces should finalise the support price of wheat for the next year. Later on, NA Standing Committee on Commerce in the meeting on September 2, 2022, recommended that Federal Government may announce the MSP of wheat not less than Rs3,000 per 40kg.

The committee was further informed that wheat is the staple crop it ensures food security of the country which is cultivated over 22 million acres and accounts for 8.9 percent of the value added in agriculture and 1.6 percent of the Gross Domestic Product (GDP).

Punjab is the biggest province which constitutes 75 percent in area sowing followed by Sindh with 13 percent, Khyber-Pakhtunkhwa with eight percent, and Balochistan five percent contribution. Similarly, the production share constitutes as 76 percent by Punjab, 15 percent by Sindh, five percent by KP, and four percent by Balochistan. Globally, Pakistan is the 8th largest wheat-producing country, with productivity in the range of 28-30 maunds per acre. Major contributing factor in the low productivity is the highest cost of production, the panel was further informed.

Copyright Business Recorder, 2022

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