Lobbies active to keep wheat prices higher

Despite a bumper wheat crop this year, poor people will not get wheat and flour at cheap rates as powerful and extra-market forces have connived to keep wheat prices higher, agro-economists told Business Recorder here on Saturday.
In support of their analysis, they said the ministry of food, agriculture and livestock (Minfal) had fixed production target of wheat at 22 million tons for the current financial year as against the last year's 21.6 million tons.
They said because of favourable weather conditions and timely availability of inputs, agriculture experts and the US department of agriculture, after survey of the wheat crop in the country, has predicted a bumper crop.
However during the meeting of federal agriculture committee, the agriculture minister has downsized this season's production of wheat to 20.5 million tons, which is one million tons less than even last year's production.
The agro-economists said given the price-centric attitude of Minfal bosses, who do not believe in reducing the price even in the midst of a bumper crop, have undermined the crop condition to prevent fall of wheat prices in the market.
"For them the people of Pakistan have no right to get cheap wheat or flour even when there is a bumper wheat crop, though, in the event of a poor crop, ordinary consumers are forced to buy flour/wheat expensively," experts emphasised.
Talking to Business Recorder, they said Minfal was very concerned farmers were not getting support price of Rs415 per 40kg fixed by the government and were being paid between Rs360 to Rs370 by traders in Sindh where in addition to good crop, there is also a carryover of about 800,000 metric tons from the previous crop.
They said in Punjab, wheat harvesting will start in the third week of April, and the agriculture minister has also expressed concern that similar crash in wheat prices may also occur in the province.
They said it was in this background that Prime Minister Shaukat Aziz had stated just 24 hours before the federal agriculture committee meeting this week that "the government would not allow wheat prices to fall in the wake of reports of better crop - if required the government will buy the entire wheat crop and sell the flour in local market at lower price".
They said wheat purchase price could not fall if the production was less than last year's 21.6 million tons figure and believed Minfal bosses in connivance with four crop reporting directors of the four provinces have deliberately understated size of the wheat crop to prevent fall in wheat prices.
They were of the view Minfal had adopted the same strategy followed last year while reporting cotton production. At the start of the season, it was estimated at 10.7 million bales despite the fact that everybody knew Pakistan was about to witness a bumper cotton crop. Then it was revised up to 11.1 million; 12.2 million and finally to 14.6 million bales.
They said Minfal is repeating the same policy with the wheat crop this year to please vested interests at the cost of poor people, whose biggest problem is availability of flour/wheat at cheap rates.
Experts said this year the government has approximately 2.5 million tons of wheat as carryover stock as against 0.2 million tons of last year.
They listed several reasons for such a large carryover stock: (i) Punjab government some time around August/September asked the federal government to import one million tons of wheat exclusively for Punjab at a cost of $205 million despite having sufficient stocks, (ii) wheat/flour could not be exported due to imposition of 15 percent duty on export of flour and good crop in Afghanistan.
They said the federal government had fixed the issue price of wheat at Rs424 per 40kg but the Punjab government kept the issue price at Rs460 per 40kg, hence flour mills did not pick up 1.4 million tons of wheat of the Punjab government, which was still lying in its godowns.
Agro-economists believe the Punjab government was forced by powerful vested interests and lobbies not to sell its wheat at the federal government's fixed issue price of Rs424 per 40kg so that they could sell their wheat at higher prices to flour mills.
They said after sugar and cement, powerful lobbies in the government have already pushed prices of pulses higher during the past six months, which have gone almost beyond the reach of common man.
They argued professionals and civil servants of the country are trained to control market forces but not the extra-market forces sitting in the government.
"It would be an irony that despite excessive production of wheat, lintels, etc, in the country, wheat/flour price will not be brought down for the benefit of poor people, whose entire life/economy roams around onetime bread in a day (butter is inconceivable)," lamented one economist.
They said there was a century old system in the country under which magistrates were assigned to daily check prices of essential commodities and undue profiteering in cities, towns and villages, but after doing away with this system under the so-called devolution of power through local governments, it is now free for all and poor state machinery has become irrelevant.
They said uncontrolled prices of cement, sugar, lintels, pulses, flour and other commodities are personal embarrassment for President General Pervez Musharraf and Prime Minister Shaukat Aziz as they look helpless before the unending greed of powerful lobbies, who wield great power, influence and manipulation.
They said on the one hand, the government wants to control inflation and reduce poverty, but at the same time it wants to keep prices of eatables higher, there is inherent contradiction in the policy, specially in a country where at least 30 percent people live below poverty line.
While concluding the report, this scribe cannot but quote Nobel laureate Dr Amrita Kumar, who summed up condition of the poor of the subcontinent as "the poor have no lobby, farmers do".