Provinces express inability to procure paddy

The provincial governments have expressed inability to procure paddy, citing financial constraints and lack of administrative capacity and storage infrastructure, sources told Business Recorder. This shocking revelation came at the Economic Co-ordination Committee (ECC) of the Cabinet meeting on October 6, 2009, which was presided over by Minister for Privatisation and Petroleum Naveed Qamar.
The ECC in its meeting on September 1, 2009, had directed Ministry of Food and Agriculture (Minfa) to develop an effective mechanism to implement an intervention price for paddy crop 2009-10.
Minfa proposed that: (i) Passco along with provinces should keep a target of a million tons of paddy to be procured for the crop in 2009-10; (ii) procurement be carried out through leasing of rice mills by the public sector organisations; and (iii) paddy be procured directly from the farmers by Pakistan Agriculture Storage and Supplies Corporation (Passco) and provincial departments at 40:60 ratio.
Sources said when the proposal came under discussion in the ECC meeting the representatives of the provinces were of the view that their governments were unable to implement the federal government''s paddy procurement plan because of financial crunch and shortage of other facilities. Passco also reported its constraints, including non-availability of specialised staff and storage facilities, apart from lack of support from provincial departments.
As a result of detailed discussions, it was observed that due to fall in paddy prices in the local market, the farmers would suffer considerable loss with no incentive to grow rice next year. It was, therefore, considered appropriate to support the growers so that they are incentivised for future.
The ECC''s considered view was that Passco be immediately put into operation for procurement of paddy, starting from Sindh, with opening for procurement centres in the rice growing areas. Simultaneously, the Minister for Food and Agriculture was asked to approach the chief ministers to secure their support for procurement by the provincial departments.
Passco had been asked to procure 40 percent of total allocated target while the Food Departments of the provinces would procure 60 percent of the allocated target, based on variety and area sown in the respective provinces. Sources said that the ECC was informed that the current market price of paddy is lower than the intervention price and timely intervention for procurement mechanism is crucial.
On the issue of procurement, Passco explained its inability to undertake the task of procurement for want of specialist staff and storage space. It was observed that the stakeholders, especially the provinces, were not taken on board on the proposals forwarded by the sponsoring Ministry.
After brief discussion on the issue, the ECC emphasised that the sponsoring Ministry would undertake consultations with the stakeholders, especially the provinces, and submit well considered proposals. Last year, the government had announced intervention price of Rs 1,500 per 40 kg for super basmati, Rs 1,250 for basmati-385, and Rs 700 for Irri paddy.
The interaction by Passco and TCP stabilised the prices which averaged at Rs 1,181 per 40 kg for Basmati paddy, Rs 660 for Irri paddy in Punjab and Rs 585 in Sindh. The Agriculture Policy Institute (API), an attached department of Minfa, was tasked to propose reasonable paddy prices for the current crop, keeping in view the ground realities like input prices.
It has estimated the cost of production of basmati and Irri paddy in the Punjab at Rs 972 and Rs 606 per 40 kg which implies that the cost of production estimates are higher by 24 percent and 26 percent over last year. The Irri cost of production in Sindh has been calculated at Rs 490 per 40 kg, showing an increase of 24 percent over last year''s price. Major factors in higher cost of production are land rent, tractor rates, tube well and water rates as well as wages.
The domestic price during 2008-09 for Basmati paddy averaged at Rs 1,181 per 40 kg during October-February in the Punjab ranging between Rs 1,020 to Rs 1,298 per 40 kg. The market price of Irri paddy in Punjab averaged at Rs 660 per 40 kg during the same period ranging between Rs 579 to Rs 726 per 40 kg. In Sindh, the market price of Irri paddy averaged at Rs 585 per 40 kg during November - February ranging between Rs 535 to Rs 686 per 40 kg. Sources said ECC had also directed the Trading Corporation of Pakistan(TCP) to be proactive in export of rice.