Low support price, high input costs to hurt wheat output: experts
ASMA RAZAQ & FAZL SHER
November 02, 2012: Pakistan is likely to miss the wheat production target of 25 million tons set for the crop season 2012-2013 because of low support price fixed by the government for 2012-13 as well as the hike in the price of farm inputs, said Chairman of Agri-Forum Ibrahim Mughal on Thursday.
He said: “Wheat sowing season has started in Punjab from October 31 while in Sindh, it started 15-20 days ago. The government has fixed the wheat production target of 25 million tons for 2012-13. Punjab has to produce 19.2 million tons while the other three provinces are estimated to produce a total of 4.8 million tons”. “In order to fulfill the overall domestic wheat requirements, wheat production in Pakistan for 2012-13 should not be less than 26 million tons. On the other hand, the government has fixed wheat support price of Rs 1,050 per 40kg that would result in reduced production”, Ibrahim Mughal added.
He said: “If the government will not increase the wheat support price from Rs 1,050 to Rs 1,150, growers’ interest in growing the crop will decline that would result in lower crop production.” Mughal said that in order to fulfill the overall wheat requirements of the country, the crop should have been sown on an area of 22 million acres but due to the lack of growers’ interest, the sowing area was estimated not to exceed 20-21 million acres. In Punjab, wheat sowing area is expected to be reduced by 1 million acres that would lead to the reduction of 1-1.5 million tons in overall production.
Pakistan produced 24.0329 million tons of wheat in 2008-09 with a total sowing area of over 22.353 million acres. In 2009-2010, the total production of wheat was 23.311 million tons cultivated on 22.565 million acres. In 2010-2011, the total production of wheat was 22 million tons cultivated on 25.214 million acres and in 2011-2012, the country produced 23.34 million tons of wheat and the total sowing area was 21.434 million acres.
In the international market, wheat is being sold at $365/ton (Rs 1350/40kg) and it is estimated that this year, wheat production in the US, Russia and Australia would be less than last year and as a result international prices are projected to rise. However, in Pakistan, the rate of this commodity per 40kg is the same as last year that may lead to the smuggling of the commodity, Mughal said.
Last year, the government’s carryover wheat stocks were around 4 million tons, but this year these stocks are expected not to exceed 700,000 tons. High prices of inputs used in wheat crop production like pesticides and fertilizers have increased the cost of production of the crop. “Due to high price of inputs, wheat growers avoid using appropriate quantities of fertilizers needed to increase the per acre yield. As a result, the wheat yield has remained stagnant for the past 13 years. Wheat growers are getting 29 maunds per acre yield while it should not be less than 35 maunds per acre,” he said.
Ibrahim Mughal said that the sugarcane production was estimated to be not more than 58 million tons, but due to favourable weather and a considerable increase in sowing area, the overall crop production was expected to be around 60 million tons. “Unfortunately, the procurement price of sugarcane for 2012-13 has been fixed at Rs 170 per 40kg while the cost of production of the growers is Rs 187 per maund. In other words, sugarcane growers will have to face a loss of Rs 17 per 40 kg. According to an estimate, sugarcane growers of Punjab will have to face a loss of Rs 17-18 billion this year if the government does not increase the procurement price of the commodity,” Mughal said.
Total production of the sweetener in 2008-2009 was 50.046 million tons, the country produced 49.34 million tons of sugarcane in 2009-2010, in 2010-11 it was 55.31 million tons and in 2011-2012 cane production was 58.4 million tons. A senior official of Agriculture Policy Institute (API) said: “It is premature to say anything about the overall wheat sowing area for 2012-13 across the country. Prices of agriculture inputs like fertilizers and pesticides have been reduced than last year which meant that adequate use of the inputs by growers would lead to a considerable increase in the yield of wheat. As far as the wheat support price was concerned, the government conducted proper agricultural analysis – short- and long-term changes in area, yield and production of wheat, export and import parity prices, cost of production, profitability in use of fertilizers and parity between input and out prices before formulating the support price of the crop”.
The official said that in the past, the support price policy programe covered wheat, sugarcane, cotton, rice, gram, onion, potatoes, sunflower, soyabean and canola. In May 2001, the government decided to continue support price policy only for wheat, sugarcane, rice and cotton crops. Later in 2002 it was decided that the support price policy of Wheat, Rice Paddy and Seed Cotton will be determined by the federal government while provincial governments will fix the support price of sugarcane.
The official said that after trade liberalisation under the WTO regime, the transition in the price policy system took place during the past decade. “After the transition in the policy, the support price is only announced for wheat crop to protect the national food security.” He said that for sugarcane, the provinces announce indicative prices, which are implemented via sugar mills operating in the private sector.