Tuesday May 17, 2022

Govt offers growers incentive to increase wheat buying

May 14, 2022

LAHORE: In a last ditch effort, both provincial and federal authorities have raised transport charges by Rs50/bag as an incentive to encourage growers to sell more wheat to the government in a bid to meet revised procurement target, which, the officials said was actually worsening the volatile grain market.

The open grain market has been continuously trending upwards for the last several days, touching a record Rs2,370 to Rs2,400/40kg of wheat against the official rate of Rs2,200 in urban centers.

Keeping such lucrative rates in view for the farmers, public sector departments have been left with no choice but to increase the minimum support price of wheat on account of transportation charges in a bid to attract them.

The Provincial Food Department has been able to procure 4.4 million tonnes wheat so far and is trying to fetch as much grain as possible. In order to make it sure, the department has increased transportation charges by Rs50/bag. Similar is with the case of Pakistan Agricultural Storage & Services Corporation Limited (PASSCO). The federal institution also launched a similar effort for meeting the revised procurement target 0.5 million tonnes.

However, according to growers’ representatives, this move is likely to further heat up the already volatile grain market due to a variety of reasons.

Central President, Kisan Board Pakistan (KBP), Chaudhary Shaukat Ali Chadhar and spokesperson Haji Ramzan took it as a counter-productive move.

They said with the increase of transportation charges and enhancement of procurement target, wheat market would take it as a negative step as it would result in signaling shortage of grain in the open market.

“The wheat is not coming to the centers in little quantities. It seems that the market is going to dry up in a few weeks and it is highly unlikely that the food department will buy a considerable quantity of wheat even with an increase of transportation charges,” they observed.

They said an increase in the transportation charges in fact signaled the wheat prices would increase further in the market.

“This will incite hoarders to the extent that they will avoid selling wheat in the market as much as possible, while black-marketing of grains is already rife.”

Instead of such tactics, the KBP officials suggested the Food Department leave the market for now in order to allow the private market to function independently. “Otherwise, wheat and flour rates will go up further,” they added.

It may be noted that the public sector, including the PASSCO and the Provincial Food Departments, had reported their carry-forward stocks at the level of 1.85 million tonnes at the start of the new Food Year on May 1, 2022.

The national wheat requirement for the Food Year 2022-23 is estimated at 30.79 million tonnes, including a quantity of two million tonnes of strategic reserves, while national production has been estimated to be short of about two million tonnes against the target.

The federal government has evolved a strategy to buy as much wheat as possible from the local market with a view to reduce imports of costly grain. Center has also increased the procurement target of public sector departments.

In another move, it has exempted the import of three million tonnes of wheat from duties, taxes, and Public Procurement Regulatory Authority (PPRA) rules. It was decided that the government will import two million tonnes of wheat on a government-to-government (G2G) basis, while one million tonnes will be imported through an international tendering process.

In the case of sanctions on Russia, the Trading Corporation of Pakistan will be allowed to import the entire quantity of three million tonnes of wheat through international tendering.