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October 27, 2020

ECC raises wheat support price by Rs200 per 40kg

Top Story

October 27, 2020

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday turned down the proposed minimum support price of wheat by the Ministry of National Food Security & Research at Rs1,745 per 40kg and approved it at Rs1,600 per 40 kg for wheat crop 2020-21.

The ECC preferred to keep the minimum support price close to Punjab’s proposal as the most populated province of the country had proposed wheat support price at Rs1,650 per 40kg. However, the high-powered committee constituted by the ECC decided to keep the support price of wheat at Rs1,600 per 40kg.

Two divergent views existed on wheat support price as the ECC members belonging to rural backgrounds asked for increased support price arguing that through imports of wheat, the precious foreign exchange was being provided to foreign farmers but the domestic farmers were deprived of getting due benefits when prices in the international market surged. However, the members from urban areas expressed fears that the increased support price would cause rising food inflation that was already getting out of control.

Despite Ministry of National Food Security and Research insistence as they tabled the summary with increased support price of wheat at Rs1745 per 40kg and the Planning Commission’s research arm—Pakistan Institute of Development Economics (PIDE) had supported the idea of fixing higher support price at Rs1750 per 40kg arguing that the price of wheat were already on higher side in the domestic market in the range of Rs2250 per 40kg so the support price proposed by Ministry of National Food Security would not result into escalating the inflationary pressures.

However, the government preferred to keep the wheat support price at Rs 1600 per ton against Rs1400 per 40kg last season so the minimum support price of wheat increased by Rs200 per 40kg. However, it is ironic that the government was providing more money to foreign farmers but it is reluctant to share increased benefits with the local farmers.

ECC also decided to release 50% of the tariff differential subsidy to the Power Division. Finance Division has earmarked Rs140 billion for 2020-21 as Power Division subsidy. The release of Rs.65.8 billion demanded by the Power Division will be used for payments to the power producers in order to maintain adequate liquidity.

On the summary moved by the Ministry of Industries and Production for the determination of Gas rate for operations of Fatima fertilizer and Agritech, ECC decided that gas rate of PKR 772/MMBTU with Variable contribution [email protected] 186 per bag may be offered to both the units for the period 3rd November 2020 onwards. It was briefed to the ECC that GoP’s share at this gas rate has been estimated by NFDC on the basis of RLNG’s last notified rate for July by OGRA, which is approximately 0.42 Billion. Further, actual payment by GoP for price differential sum to SNGPL may vary due to difference in monthly rate of RLNG.

ECC granted approval for the sale of surplus power available at the incremental rate of Rs. 12.96/kwh to all industrial consumer categories, excluding zero-rated industrial consumers, on the incremental consumption over their respective historical consumption or established benchmark. ECC also formed a committee consisting of Dr. Ishrat Hussain, Dr. Waqar Masood, Federal Minister for Industries and Production, Hammad Azhar, Federal Minister for Power, Omer Ayub, SAPM Nadeem Babar and SAPM Tabish Gohar to prepare a proposal to include K-Electric in the package. The Committee will also propose whether the package shall continue for one year or three years.