The Ministry of Finance has decided to release Rs 151.5 billion to Punjab Food Department and Pakistan Agricultural Storage and Supplies Corporation (Passco) for procurement of wheat while the Punjab Food Department has decided to release wheat at Rs 950 per 40 kg to provincial flour mills soon after the start of procurement process, sources told Business Recorder.
They said that Rs 111 billion has been earmarked by the Ministry of Finance for Punjab Food Department and Rs 40.5 billion for Passco for procurement of wheat in 2008-09. The amount will be released by a consortium of eight banks including MCB, NBP, Standard Chartered and Faysal Bank. Sources said that Punjab Food Department and Passco are trying to get the sanctioned amount from the commercial banks at a mark-up of 1 percent or 1.25 percent.
According to sources, the Punjab Food Department is to utilise Rs 102 billion out of Rs 111 billion for wheat procurement. "We have some previous stock, that is why we will utilise 92 percent of sanctioned amount on procurement. We will keep the rest of eight percent to overcome situations like shortage of commodity in the domestic market", sources said.
They said that according to a rough estimate, to procure 3.5 million tons wheat, almost Rs 83 million to Rs 85 million is required. But as the price of wheat is reducing each passing day in global market, it is apprehended that the Punjab Food Department might have to procure more than 3.5 million tons wheat to ensure the price of Rs 950 per 40 kg to the growers.
Sources maintained that wheat is being supplied to Punjab flour mills at Rs 730 per 40 kg but after the beginning of procurement process in the province, the commodity would be released at Rs 950 per 40 to the flour mills. "The Punjab government would certainly follow the directive of the Ministry of Food and Agriculture (Minfa), based on the decision of the Cabinet that wheat should be released to the flour mills at a price near to Rs 950 per 40 kg", sources added.
Wheat prices in international market have reduced by 52 percent as compared to the corresponding period of last year. According to International Grains Council, wheat price has reduced to 243 dollars per ton against 507 dollars per ton of last year.
According to the schedule, the procurement targets are: Punjab has to procure 3.5 million tons, Sindh 1.2 million tons, NWFP 0.3 million tons, Balochistan 0.05 million tons, and the Pakistan Agriculture Storage and Services Corporation 1.5 million tons wheat.
Punjab would start procurement from April 15. Sources said that after the procurement of wheat at Rs 950 per 40 kg, a 20 kg flour bag would be sold at Rs 520 in the domestic market. "Nowadays, a 20 kg flour bag is being sold at 410 in the local market. In Balochistan, the flour is being sold at Rs 490 per 20 kg while in Karachi it is available at Rs 500 per 20 kg", sources added.