EDITORIAL: Wheat and sugar prices have registered an alarming rise subsequent to the much hailed unprecedented decision taken by Prime Minister Imran Khan to make the inquiry reports on these two commodities public – a report that named senior political figures from all parties, including the ruling Pakistan Tehrik-i-Insaaf.
The two reports also held the government (federal and provincial) responsible for: (i) extending an export subsidy out of the taxpayers’ money at a time when existing domestic stocks did not justify allowing its export because of the distinct possibility of a raise in domestic prices; (ii) inordinate delay in the implementation of the decision to determine how much to import to ensure that resultant stocks do not compromise the farmer’s decision to grow the crop in the next sowing season and domestic prices remain within reach of the poor and the vulnerable – a responsibility tasked to the Economic Coordination Committee (ECC) of the Cabinet chaired by the Advisor to the Prime Minister on Finance Dr Hafeez Sheikh; (iii) ignorance of the possible impact of announcing the import of a large quantity on the international market price with a consequent negative impact on the country’s scarce foreign exchange reserves; and last but not least (iv) failure to understand that the minimum support price can determine a farmer’s decision to grow one crop instead of another.
The list of delays in decision-making is indeed exhaustive. On the last day of September 2020, a parliamentary panel recommended minimum support price of wheat at between 1800 to 1900 rupees per 40kg, urging the government to take a quick decision before farmers decide what to sow in the next season. On 13 October, the National Assembly Standing Committee on Commerce was informed by the Ministry of National Food Security and Research (MNF&R) that approximately 1675 rupees per 40kg as minimum support price would be proposed to the ECC for approval, an estimate based on data provided by all provinces except Sindh (though inexplicably the representative from the MNF&R gave the inexact figure of 1600-1700 rupees per 40kg only after being repeatedly requested by the Chairman to disclose the recommendation by Punjab). On 19 October, the MNF&R urged the ECC to raise the minimum support price of wheat to incentivize farmers to grow enough in the next sowing season or else face the prospect of a greater shortfall in the upcoming season. The ECC deferred the decision and instead employed a usual delaying tactic by establishing a committee to evaluate the proposal for the increase in the support price.
In its next meeting, the ECC decided to raise the minimum support price of wheat to 1600 rupees per 40kg from the previous level of 1400 rupees per 40 kg, and on 28 October the decision was deferred by the Cabinet for two days with the Prime Minister’s directive to take all provinces on board. Almost one week later, however, the decision remains pending. Meanwhile, Sindh has raised the support price to 2000 rupee per 40kg.
There is little doubt that the ECC and the Cabinet’s reluctance to raise the minimum support price to what has been suggested by provinces is based on the assumption that it would automatically raise domestic prices, a politically unpopular decision. But a delay in taking a decision may lead to even higher domestic prices next year, especially if the international prices are raised due to Pakistan’s increased import requirements paid for by our scarce foreign exchange reserves.
Farmers maintain that the more than one month delay in deciding the minimum support price implies that most farmers have already decided what crop to grow in the next season and may lead to a worse wheat shortfall in next fiscal year.
To conclude, the decision not to take a timely decision is not only eroding the value of each rupee earned/disbursed under the Ehsaas programme by the general public but would also impact on the income of the large number of subsistence farmers in this country and put further pressure on our foreign exchange reserves.
Copyright Business Recorder, 2020
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