ISLAMABAD: The government is likely to procure 7.725 million tons of wheat during 2011-12 for which it will arrange Rs210 billion from banks on the request of provincial governments and Pakistan Agricultural Storage and Supplies Corporation (PASSCO), sources close to the Ministry of National Food Security and Research told Business Recorder on Tuesday.
Punjab’s wheat procurement target will be four million tons, for which it will require Rs105.3 billion, followed by Sindh’s 1.3 million tons, requiring Rs34.125 billion. Khyber-Pakhtunkhawa’s (KP) 325,000 tons would need Rs8.531 billion, Balochistan would need Rs2.625 billion for procuring its 100,000 tons and PASSCO’s two million tons would require Rs59 billion.
The sources said that Prime Minister Yousaf Raza Gilani had approved a support price for wheat crop 2011-12 at Rs1,050 per 40-kilogram in November last year.
The support price announcement is complemented by fixation of wheat procurement targets for the public sector.
During the previous three years, public sector wheat procurement has remained at an average of over six million tons a year.
The current public sector wheat stocks are reported to be 4.485 million tons as on March 20 this year. This includes a strategic reserve of 540,000 tons with PASSCO and 1.9 million tons with the government of Punjab.
“We are expecting that closing stocks of wheat will be 3.4 million tons at the beginning of the next procurement operation,” the sources said.
They said that the Ministry of National Food Security and Research had recommended two options for handling the wheat support price issue. Option one is to increase wheat support price and option two is to remove Reformed General Sales Tax (RGST) on major farm inputs like urea fertiliser, herbicides and tube well electricity bills or provision of subsidy on urea, herbicides and tube-wells’ electricity bills.
The secretary of the National Food Security and Research is said to have informed a meeting presided over by the prime minister that his ministry had already consulted provincial food and agriculture secretaries in November last year without arriving at any consensus on whether to increase or maintain the current wheat support price.
However, the following options were recommended during the meeting: (i) No increase in support price to check further food inflation; (ii) an increase of between Rs50 and 100 in the support price to cover the increase in the cost of production; (iii) exemptions of RGST on urea, herbicides and farm and (iv) provide 15 per cent subsidy on urea, electricity bills and herbicides to the farmers, if RGST exemption is not technically possible.
During the discussion, the prime minister also requested Mian Manzoor Ahmed Wattoo, the Minister for Kashmir Affairs and Gilgit-Baltistan for his input.
Wattoo said that prior to the enforcement of 18th Amendment, a task force on agriculture had been formed headed by the federal minister for food and agriculture, besides comprising other relevant ministers. It was mandated to develop a consensus on wheat support price before submitting its proposals to the cabinet.
The task force stands terminated after the closure of the ministry of food and agriculture. However, it was an appreciable move by the Ministry of National Food Security and Research that they have made a consultation on the wheat support price with the provincial governments. A reference was also made about the quantum jump in wheat support price in 2008-09 by the government. This decision had a positive impact on rural economy. It has also generated a great deal of appreciation and good will for the government among rural masses. Currently, the situation has changed because of the imposition of RGST, and other factors have also contributed to a substantial increase in prices of farm inputs. The hike in input prices has resulted in enhancing cost of wheat production.
On the other hand farmers are facing serious difficulties in marketing their rice crop and seed cotton (phutti), prices have slid and are currently hovering around Rs2,500 per 40 kgs. Under such conditions farmers’ interest in growing wheat crop has badly eroded, which can only be restored by announcing an increase of at least Rs 100 per 40 kgs.
The minister for Kashmir affairs supported the idea of announcing an increase in wheat support price by the federal government as in case of wheat shortages, provinces would expect the federal government to import wheat and make it available to the people.
During an earlier meeting chaired by the prime minister, it had been decided that the RGST would not be imposed on farmers with land holdings of 12.5 acres or less. This decision has not been implemented, which put additional financial burden on small farmers.
He further argued that there was a need to streamline imported urea as there is a price differential of Rs500 per bag between imported and locally-produced urea fertiliser. The ministry of industry and production was urged to handle this issue on a priority basis in collaboration with provinces.
Minister for Religious Affairs Syed Khursheed Shah said that according to his personal knowledge, farmers were discouraged from planting wheat if its price was less than Rs950 per 40 kgs. Last year’s difficulty in disposal of wheat by the farmers and increased cost of production are major limiting factors in this regard. Therefore, the government should take a decision about increasing the wheat support price without any further delay to persuade farmers to sow wheat.
Minister for Water and Power Syed Naveed Qamar pointed out that after the 18th Amendment, the matter of fixing the wheat support price needed to taken up in the Council of Common Interest (CCI). The federal government, he said, should play a coordinating role in consultation with provincial governments in this matter.
Minister for National Food Security and Research Mir Israrullah Zehri stressed the need for resolving issues relating to the availability of fertiliser, especially urea, and suggested that fertilisers’ supply should be ensured on a priority basis during December, which was a peak month for its consumption. It was also pointed out that the farmers were complaining about price hike and malpractices at the grassroots level.
After having input of the participants the prime minister had fixed the wheat support price for next year at Rs1050 per 40 kg.—MUSHTAQ GHUMMAN
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