The federal government is unlikely to arrange an amount of Rs 157 billion for procurement of wheat in 2011 because of financial constraints. This was the crux of the discussion on wheat procurement and presentation given by the Ministry of Food and Agriculture (Minfa) at a recent meeting of the Economic Co-ordination Committee (ECC) of the cabinet.
In light of ECC decision taken in its meeting on January 13, 2011, Minfa made a presentation before the ECC on wheat crop size and production, year-wise production, its annual requirement, year-wise procurements (2005-2010), support prices from 2000-2011, prices including incidental charges for 2010, local and international prices comparison, anticipated disposal of wheat stock 2010-2011, wheat available for export, value of stocks in hand, disposal of wheat by Punjab and Sindh, stock position, and anticipated closing stock purchasing from 2010-11.
It was also revealed that wheat production size in 2008-09 and 2009-10 was 24.03 million tons and 23.30 million tons, respectively, and public sector procured 9.2 million and 6.7 million tons, respectively. According to Minfa, it has been estimated that during the year 2010-11 its production will be more than 24.000 million tons. The total annual requirement of the country with a population of 175 million at the rate of 124 per kg per person comes to 24.06 million tons including 0.50 million tons for Afghanistan and seed/feed/wastage at the rate of 8%.
The support price of wheat during the last ten years had been enhanced from Rs 300 to Rs 950 per 40 kg. Wheat price of one ton is Rs 23,750 and after adding incidental charges of Rs 5,000 the total per ton cost comes to Rs 28,750 ($334.30). While Pakistan's wheat price remained stable at $334/tons, it varied from $279 per ton to $349 per ton from August 2010 to February 2011.
This information was gathered from International Grain Council (IGC). Financial Year 2010-11 opened with a stock of 10.250 million tons. Stock position as on March 4, 2011 was 4.975 million tons, out of which 1.50 million tons will presumably be released to flour mills by March 30, 2011. It is estimated that an additional 0.475 million tons will be exported till the close of the year, leaving a closing balance of 3.0 million tons of wheat with the public sector, the sources added.
Minfa proposed to procure 6.75 million tons wheat from the fresh wheat crop with a view to raising the opening balance to 9.75 million tons. The ECC was further informed that the total value of closing wheat stock (3.0 million tons) is Rs 86,250 billion while for the proposed purchase, ie 6.57 million tons, an amount of Rs 156.037 billion would be involved.
The Food Department of Punjab and Sindh had contracted for export of 2,400,000 and 300,000 tons wheat, respectively, out of which 492,000 and 309,000 tons wheat had been lifted from godowns as on March 4, 2011. The sources said Minfa apprised ECC that wheat stocks were being picked up by local traders and exported. The food departments of Punjab and Sindh were selling their wheat to traders at the issue prices of Rs 1,000 per 40-kg and Rs 975 per 40 kg, respectively. It was further stated that subsidy was being picked up by respective provincial governments.
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