The country is short of 2.4 million tons of wheat production target of 24 million tons fixed for 2007-08, and the country has barely achieved 21.6 million tons production, according to the third and final estimate for 2007-08 wheat production, sources told Business Recorder here on Saturday.
The average wheat yield in Pakistan has been stagnant for the last seven years while the population has increased significantly, widening the gap between demand and supply of this staple food. Flawed policies in the past led to wheat shortages in the domestic market in spite of a surplus crop. In 2006-07, the government announced a bumper crop of 23 million tons, which was in excess of domestic demand.
The government, therefore, decided to export 0.5 million tons of surplus wheat. At that time wheat prices in the domestic market were around Rs 430-435 per 40 kilograms, while in the international market it was being sold at RS. 415 per ton.
The price differential between the domestic and international market was too high and profiteers - the mill owners as well as government officials - entered the market. This led to the hoarding and smuggling of the commodity, the main reason for wheat shortage in the country.
According to a senior official of the Food Ministry, 0.8 million tons of wheat was exported, while 1.5 million tons was hoarded and around two million tons was smuggled out of the country. Throughout the government behaved like a silent spectator and when wheat prices reached Rs 780-800 per 40 kilogram in the market, the former government decided to import wheat.
The farmers did not gain anything out of this as they sold their wheat at the support price fixed by the government at Rs 425 per 40 kilograms, but the commodity was being sold at Rs 780-800 per 40 kilograms in the market.
Usually, the government fixes the wheat support price for the next crop in September to encourage the growers, but in spite of the fact that the Food Ministry sent the proposal for wheat support price three times (in September, October and November), yet at all times the proposed wheat support price of Rs 500 per 40 kilograms was rejected by the government. This became the main reason for two percent lower acreage under wheat cultivation in 2007-08.
The high prices of inputs also contributed to reduced production. The prices of DAP increased to Rs 3200 per 50 kilograms at the time of crop cultivation. That resulted in an unbalanced use of fertilisers by the growers. The government provided Rs 400 subsidy on fertilisers despite several recommendations to increase the subsidy to Rs 800-1000 per 50 kilograms, made by the National Assembly Standing Committee.
In March 2008, wheat support price was fixed by the caretaker government at Rs 510 per 40 kilograms that was lower than the cost of production per 40 kilograms of wheat. Soon after the formation of the new government, Prime Minister Syed Yousuf Raza Gilani announced wheat support price of Rs 625 per 40 kilograms from the previous price of Rs 510 per 40 kilograms.
At the time of wheat procurement, the government fixed the price at Rs 625 per 40 kilograms. But, according to the details of wheat procurement operations submitted to the Economic Co-ordination Committee (ECC) on July 15, the country was able to achieve just 78.4 percent wheat procurement target fixed for 2007-08 fiscal year.
The reason: high procurement price of Rs 650-655 per 40 kilograms paid by the private sector to the growers. By taking an overview of the situation, one can easily conclude that the flawed policies of the government have resulted in the possibility of wheat shortage in the new year also.
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