Government to lose Rs 13.8 billion in disposing off two million tons of wheat abroad

Due to unrealistic wheat support price, at variance with international market price, the government will be compelled to provide a subsidy to foreign buyers of over Rs 13.8 billion to dispose off 2 million tons of wheat abroad, Business Recorder has learnt. According to experts, the government should have set wheat support price keeping in view the price of wheat in the international market.
However, it announced a wheat support price of Rs 950 per 40 kg - 41 percent higher than the international price at present. In the government's defence it is relevant to point out that Pakistani growers are facing higher input costs than those prevailing in other countries and thus the government would not have succeeded in motivating farmers to increase the area under wheat cultivation without reasonable support price.
Higher input costs include price of fertilisers, diesel, farm machinery as well as poor use of farm machinery and lack of scientific research. At present, the government has more than 3.5 million tons of surplus wheat and Prime Minister has already approved export of 2 million tons. "But the government should have taken the decision earlier when there was less disparity in wheat prices between the international and domestic market," experts said.
Despite Prime Minister's approval, government has failed so far to chalk out a strategy for export of surplus wheat due to lower prices in international market relating to what the government paid. Experts observed that due to irrational wheat support price, Pakistani wheat growers as well as common consumers are suffering, while the millers, middlemen and others are taking full advantage of the situation.
Talking to Business Recorder a high official of Federal Ministry for Food and Agriculture, on condition of anonymity, said that present problems faced by the local wheat growers are linked to irrational wheat support prices. The official stated that in open market, 40kg of wheat was being traded at Rs 850 (reflecting, according to some estimates, a profit of around Rs 80), whereas the public sector departments were purchasing it at Rs 950 and at present public sector departments have completed 63 percent of the total procurement target.
Dr Qadir Bux Baloch former Spokesperson of Federal Ministry for Food and Agriculture when contacted said currently in global market per ton wheat is being sold at 200 dollar, while in Pakistan per ton wheat price is around 282 dollar, which is about 41 percent higher than the international wheat price.
He said that owing to serious wheat crises in 2008 the government enhanced wheat support price from Rs 625 to Rs 950 in a bid to motivate farmers to grow more wheat, resultantly in 2009 farmers managed to produce record wheat crop. He added that again during current year Pakistani farmers, despite unfavourable weather conditions, produced about 23.8 million tons of wheat whereas domestic requirement is 22 million tons thus 1.8 million ton is surplus.
In 2009 public sector wheat procurement was 9.5 million tons and at present government has about 4 million tons of wheat as carryover stock, whereas this year public sector wheat procurement target is 7.5 million tons, revealed an official of the Agriculture Ministry. He added that the government does not have adequate storage capacity.
Chairman AgriForum Pakistan, Ibrahim Mughal when contacted said that the Indian government was providing all agriculture related inputs including electricity, fertiliser and diesel to the farmers at subsidised rates, whereas in Pakistan these inputs were available to farmers at much higher rates.
He added that high input costs have destroyed the farm sector and currently farmers are not in a position to meet their current expenditures. Mughal said that low prices have caused around Rs 10 billion losses to the farmers and feared that during next season the growers will reduce area under wheat cultivation.