Delay in support price decision to create severe wheat crisis


November 4th, 2013

ISLAMABAD – Announcement of new support price of wheat which, if delayed, may cause a crisis as farmers will not increase the sowing area if its support price is not increased in time.
The sources said that at this time if the support price was not increased as an incentive for the farmers, the wheat-cultivation area might decrease that ultimately would create the food crisis in the country and the government would have to import around a million tons wheat to meet the demand.
Wheat support price is generally announced before the start of its sowing season. It is to encourage them for the excessive sowing of the commodity. When the country faced a serious wheat crisis in the start of the PPP rule, the same strategy was adopted by the then rulers and the wheat crisis ended after one year.
The country is again heading towards a serious wheat crisis. Last year the wheat sowing area decreased up to 7 percent, resulting in the import of 300,000 tons of wheat from Russia at the rate of Rs 1,400 per 40 kilogram whereas the support price was Rs 1,200 per 40kg that was offered to the farmers in the start of the season.
The sources said that this year if the wheat production did not achieve the target of 26 million tons, there would be no choice for the government but to import at least 1 million tons of wheat at a higher price.
Farmers’ representative organisations say the price should be set at Rs 1,500 per 40kg otherwise the country would not be able to produce sufficient wheat. They are of the view that due to a big increase in the input costs, the farmers do not find any profit in wheat by selling it at the price of Rs 1,200 per 40 kg.
Presently, the commodity is being sold at the rate of Rs 1,350 per 40 kg in the open market, but farmers are not beneficiaries of that price as they have already sold their commodity at the price of Rs 1,200 per 40kg, the rate offered by the government as the support price last year.
If the government does not increase the support price this year, the rate will rise even then, but the farmers in that case will not be able to benefit from it while traders will have the opportunity to exploit the growers. On the other side, the government would also suffer in terms of foreign exchange loss that it will have to spend on the import of wheat. Courtsy The Nation
by Usman Cheema

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