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November 7, 2020

ECC revises up wheat support price to Rs1,650 per 40kg

Business

November 7, 2020

ISLAMABAD: The federal government on Friday revised up wheat support price by Rs50 to Rs1,650 per 40 kilograms, second time in a short span after revisiting the estimated cost of production for farmers.

The Economic Coordination Committee (ECC) of the cabinet took the decision during a meeting presided over by Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh.

However, the current wheat release price was maintained at Rs1,475 per 40kg. The federal cabinet is to approve the decision in its next meeting.

The federal government has increased the support price of wheat because the ministry of food security estimated that the cost of production of farmers stood at Rs1,585 per ton basis but the government fixed it support price of wheat at Rs1,600 per ton. After facing criticism, it decided to jack up the support price by Rs50 to Rs1,650 per ton. Sindh fixed support price at Rs2,000 per 40 kg.

The looming wheat crisis has been aggravating as the government delayed decision making for importing wheat and the price of wheat escalated in international market from $180 per ton in Ukrainian market to now in the range of $284 to $292 per ton. Pakistan, Jordan and Egypt are importing wheat because of shortages. Prices have gone up at least $100 per ton in last few months period.

So far about 700,000 tons imported wheat reached Pakistan and total 1.8 million would arrive till January 2021.

The government made key changes in food ministry after witnessing severe criticism at the federal cabinet where some ministers used very harsh language against bureaucrats and termed them “cheaters” after which one federal secretary defended position on behalf of bureaucracy by arguing that the burden of delayed decision making could not be put on them for making them scapegoat.

Now there are fears that if the imported wheat is smuggled out or hoarders create shortages then the wheat prices in domestic market might further escalate.

The government would have to avert looming crisis going from bad to worst next year

After thorough consultation, ECC also approved grinding ratio of wheat at the base level of 70:30. It was further decided that ratio for the refined varieties of wheat flour would be decided by the coordination committee later.

The ECC also approved aggregate release of wheat at 38,000 tons per day to the flour mills. Representatives of all the provincial governments were on board. This included 25,000 tons by Punjab, 8,000 tons by Sindh, 4,000 tons by Khyber Pakhtunkhwa and 1,000 tons by Balochistan.

ECC also approved the request by the government of Punjab to provide additional 700,000 tons of wheat, out of which 400,000 tons of wheat will be imported by Trading Corporation of Pakistan for Punjab.

Lastly, technical supplementary grant for the settlement of outstanding dues of non-litigant retired employees of Pakistan Steel Mills amounting to Rs11.7 billion was also approved by the ECC.

As directed by the Prime Minister, a Coordination Committee was constituted to deal with import of wheat and its logistics and distribution to the recipient agencies.

The committee will be chaired by the Adviser Finance and would include Adviser to the PM for Institutional Reforms Ishrat Hussain, Minister for Industries and Production Hammad Azhar, Food Security Minister Fakhar Imam and State Bank of Pakistan Governor Reza Baqir, PM aide on revenue Waqar Masood, and secretaries.