Ministry proposes wheat procurement target of 5.150 million tons

The Ministry of National Food Security and Research has proposed wheat procurement target of 5.150 million tons for 2019, despite damage to crop in South Punjab due to thunderstorms, well informed sources told Business Recorder. Punjab Government, sources said, which is now revising down its procurement target, has imposed inter-provincial ban on movement of wheat, fearing crisis in the coming days.
According to the Ministry of National Food Security and Research financial requirement to procure 5.150 million tons of wheat has been calculated at Rs 158.522 billion. The sources said, in order to ensure food security of the country and to provide a fair return to the farming community, the respective Food Departments and Pakistan Agriculture Storage and Services Corporation Limited (PASSCO) procure wheat every year at a Minimum Guaranteed Price (MGP) from the farmers.
The ECC, in its meeting held on November 11, 2018 formally approved to maintain the MPG of wheat @ Rs 1300 per 40 kg, for the wheat crop 2018-19. Public sector enters into the local market as an alternate buyer and their wheat stocks serve the purpose of maintaining steady releases and price stability during the lean periods of wheat supplies as well as fulfilling the food requirements of the country.
During the preceding three years, the public sector had procured 6.104 million tons wheat, on average, against the assigned average target of 6.733 million tons per annum. Last year a quantity of 5.989 million tons of wheat was procured by the public sector against the procurement target of 6.100 million tons. Low wheat procurement was made due to leftover stock of the previous year to the tune of 5.942 million tons.
The current public sector wheat stocks as on April 24, 2019 were at the level of 3.785 million as compared to 6.30 million tons in the corresponding period of last year. In the meeting of wheat review committee held on February 13, 2019, a procurement target of 6.90 million tons was fixed, in consultation with all stakeholders. The target consisted of 4 million tons in Punjab, 1.40 million tons for Sindh, 0.30 million tons for KP and 0.10 million tons for Balochistan and 1.10 million tons for PASSCO.
It was decided that provincial cabinets will give concurrence and endorsement. Provincial Governments have submitted their wheat procurement targets and financial requirements on the requisites format. However, Government of Sindh decreased its procurement target from 1.40 million tons and forwarded a tentative target of 0.750 million tons subject to approval of their cabinet committee whereas the ECC on April 8, 2019 had already approved the wheat procurement target of 1.10 million tons for PASSCO.
After examining the entire situation, Ministry of National Food Security and Research has recommended the government to fix the target of wheat procurement for wheat crop 2018-19 at the tune of 5.150 million tons with the financial limits of Rs 41.787 billion as per for follows details: (i) Punjab 4 million tons, Rs 130.360 billion;(ii) Sindh 0.750 million tons- Rs 24.375 billion ;(iii) KP 0.300 million tons - Rs 0.00( KP government will utilize its own resources for wheat procurement) and Balochistan 0.100 million tons - 3.787 billion. The total financial requirement for 5.150 million tons of wheat has been calculated at Rs 158.522 billion.
The Finance Division stated that from data procurement target and financing needs and carry forward stocks in last five years in respect of PASSCO, it is ascertained that over the years, procurement quantum by PASSCO is increasing resulting in increase in carry forward stocks at the time of fresh procurement. This phenomenon has resulted in enhancement in financing requirements of PASSCO. The other aspect of this additional procurement is that PASSCO/Ministry of National Food Security and Research starts initiating offloading of wheat stocks either through exports or through private parties with subsidy to be picked up by the Federal Government.
Finance Division has supported procurement of 1.1 million tons of wheat by PASSCO for crop 2019 subject to the condition that PASSCO will manage offloading of procured wheat without subsidy from the government of Pakistan. Finance Division has further stated that the proposed incidentals of Rs 5.769 billion should be agreed at provisional basis at this stage, subject to final adjustment as per actual and past practice.