ISLAMABAD: The federal cabinet is said to be facing a catch -22 situation on fixation of Minimum Support Price (MSP) of wheat crop 2020-21, after Sindh took the lead to announce MSP of wheat at Rs 2000/40 kg, well-informed sources told Business Recorder. At the same time, PTI's key ally in Punjab, Ch. Pervaiz Elahi, Speaker Provincial Assembly, has proposed MSP price of wheat at Rs 2600/40 kg to incentivize farmers.
There is a clear division in the PTI government's cabinet members belonging to rural and urban constituencies on fixation of MSP of wheat crop 2020.
The sources said, during discussion at a recent meeting of federal cabinet some of the members argued that Minimum Support Price of Rs. 1600/- per 40 kg for wheat crop 2020-21 was on the lower side and would not be well-received by the farming community. Ministry of National Food Security and Research has recommended Rs 1745/40 kg based on the cost of production to incentivize farmers.
"If this MSP is announced then inter-district and inter-provincial movement restrictions should be lifted to let free market come into play," said some of the cabinet members.
Few members of the cabinet were convinced that MSP beyond Rs. 1600/40kg would translate into higher prices of wheat flour. It was suggested that announcement of MSP should be part of a special package for farmers which should include a subsidy on DAP fertilizer as well as easy availability of fungicide/weedicide and certified seed.
On October 28, 2020, the Cabinet deferred the ratification of ECC decision in the case titled 'Minimum Support Price (MSP) of Wheat Crop 2020-21' with the direction that National Food Security Division shall develop a package for farmers within 48 hours, which should include subsidy on DAP fertilizer as well as easy availability of fungicide/weedicide and certified seed. The announcement of MSP was to be a component of the package.
The government has however, approved a subsidy of Rs 1,000 per 50 kg bag of Di Ammonium Phosphate (DAP) fertilizer.
Ministry of National Food Security and Research maintains that Pakistan was among the top ten wheat producing countries in the world; however, our large and ever-growing population along with climate changes is posing unequivocal challenge to food security. It is, therefore, imperative to consistently enhance domestic wheat production not only to satisfy the rising demand but also to ensure food security.
In order to incentivize and safeguard the interest of growers, the Federal Government in consultation with Provincial Governments, reviews/announces MSP of wheat crop annually. Since 2010-11, MSP for wheat has been revised 4 times only. During 2014-15 to 2018-29, MSP for wheat remained unchanged, which eroded farmers profitability and made the crop relatively unattractive.
Ministry of National Food Security and Research further noted that a meeting of Wheat Review Committee was held on September 24, 2020, under the chairmanship of the Minister for NFS&R to get provincial input for determining MSP for wheat crop 2020-21. All the provinces provided their recommendations in writing except Sindh.
Khyber Pakhtunkhwa proposed Rs 4700/100kg or Rs 1880/40kg, Balochistan Rs 1700/40kg and Punjab Rs 1650/40kg as MSP for wheat for 2020-21. President Pakistan Kissan lttehad has proposed Rs 1850/40kg as MSP.
It has been observed that during the current year, just after post-harvest, the market price of wheat was much higher than the MSP and therefore the public sector faced tremendous difficulties to meet the procurement targets. Farmers' who sold wheat to the public sector suffered a financial loss vis-a-vis those who sold it in the open market to private parties. The local market wheat price, as reported by the Pakistan Bureau of Statistics (PBS), for the week ended on October 8, 2020 was Rs 2256.56/40kg, whereas import parity of recent imports by the private and public sector gives a price range from Rs 1650 to Rs 1977/40kg (CNF at Karachi).
Ministry of NFS&R has recommended that the Minimum Support Price of Wheat Crop 2020-21 may be enhanced and set at Rs 1745/40kg. This will incentivize the farmers by increasing their profitability to grow more wheat and will help to re-gain self-sufficiency in wheat production. The government, has, however, yet to approve the MSP for wheat.
Copyright Business Recorder, 2020
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