Thursday July 18, 2024

Finance minister advocates free-market mechanism for wheat crop

By Munawar Hasan
June 12, 2024
Finance Minister Muhammad Aurangzeb speaking at the Pre-Budget Conference 2024-25 in Lahore on May 12, 2024. — Screengrab/YouTube/GeoNews
Finance Minister Muhammad Aurangzeb speaking at the Pre-Budget Conference 2024-25 in Lahore on May 12, 2024. — Screengrab/YouTube/GeoNews

LAHORE: While commending the tremendous growth of the agriculture sector in the first nine months of 2023-24, Finance Minister Muhammad Aurangzeb advocated a free-market mechanism for strategic wheat crop.

He said this during the press conference held on Tuesday to unveil the Pakistan Economic Survey 2023-24. According to the latest figures released in the survey, wheat production stood at 31.4 million tonnes in FY2024 compared to 28.2 million tonnes last year, showing an unprecedented growth of 11.6.

However, wheat procurement by the public sector has been at the lowest ebb in the period under review, resulting in a huge decline in the commodity’s farm-gate price, the survey highlights. The negative impact on growers was pointed outd at the press conference where he defended the government’s wheat policy.

Making a case that supports leaving wheat growers on the mercy of market forces, he said that despite challenges in the large-scale manufacturing (LSM) sector stemming out of interest rates and energy issues, the country’s GDP growth found a silver-lining in the agriculture sector, which had been boosted by bumper crops. “Our saviour was agriculture on the back of bumper crops.” He said that the agriculture and dairy and livestock sectors were expected to remain a key driver of growth in the years to come.

While responding to a question regarding the low procurement of wheat and lesser offtake of urea in recent months, the FM was of the view that we should be clear that “agriculture is and will remain a critical pillar of our growth. Time will tell how we will take it forward.”

“The IMF programme is all about stabilization, but agriculture and information technology (IT) are two sectors that have no relation with the lending agency. Everything is in our control,” he said and added that the government was in control of implementing strategies to increase yields and introducing policy for seeds is totally up to us. He said that financing for the sector was also “in our hands, and we are taking steps to increase lending.”

In the backdrop of low participation in wheat procurement, the FM opined that “it is better to reduce footprint of the government in the agriculture sector as much as possible. The rice sector is going smooth. I appreciate the fact that wheat is a staple crop; rice is not. But market dynamics drive huge exports on the back of bumper rice crop. We have to get out of the cycle of announcing support price.”

He hinted that the federal government would also phase out intervention in the wheat sector. “Let be very clear that we are going to restructure PASSCO,” adding that he was convinced that we should keep strategic reserves of wheat “but does it have to be in public sector? Absolutely not.” He emphasized that things would move in the right direction if the government kept itself out of such activities.

During 2023-24, as per the Economic Survey 2023-24, wheat was sown at 9.6 million ha against last year’s area of 9.0 million ha, showing an increase of 6.6 per cent. The government maintained the MSP at Rs3,900/40 kg for 2023-24.