October 6, 2010
 

Pakistan may increase wheat support price

Pakistan's government is once again considering to increase the support price for wheat by PKR50 (US$0.58) to PKR1,000 (US$11.63) per 40-kilogramme for the next crop in the wake of rise in cost of fertilisers and other inputs, food minister said Tuesday (Oct 5).

 

The ministry would take up the summary for increasing the support price in the upcoming Cabinet's Economic Coordination Committee (ECC).

 

Federal minister for Food and Agriculture, Nazar Muhammad Gondal while chairing the meeting of the Task Force on Agriculture said that the support price of wheat must be increased from PKR950 (US$11.05) to PKR1,000 (US$11.63) per 40 kg, as the prices of inputs like fertilizers etc has increased in comparison with the last year.

 

"The per acre cost of production has increased and there would be no attraction for the farmers in sowing wheat if we continue with the last year's support price," he said.

 

The calculation made by the Agriculture Policy Institute (API) suggest that we must increase the support price to offer some incentives in the form of guaranteed procurement prices to encourage the farmers to grow wheat.

 

"Maintaining Food Security is the prime responsibility of the government and it has become a challenge after the recent devastating floods," added the minister.

 

Independent economists believe that this move further increase inflation which is already in double digits. They believe that increasing the support price never increased productivity, but brought inflation.

 

Agricultural analysts say that mere increase in price cannot boost production because other important factors like the subsidised electricity and fuel to overcome irrigation water shortage to run tubewells, availability of fertilisers and herbicides in abundance and at affordable prices, and finally an assurance that the growers will get the officially announced procurement price for their produce play a vital role in motivating farmers to go for maximum output.

 

Unfortunately, the committee did not discuss, nor proposed provisioning of the inputs at the subsidised prices to the farmers. The committee also paid no attention for controlling prices of agri inputs, but only resorted for increasing the support prices, which according to economic pundits is the main source of inflationary pressure in economy.

 

In the CPI, which gauges price hike of different consumer items, food items have more than 40% weightage. Therefore, a little increase in its prices would pinch the poor man's pocket.

 

Minister also said that poor farmers need support in the aftermath of the floods to secure food security for the coming years. The ministry is in consultation with all the provinces to finalise a relief package for the flood affected areas of the country. He said that the total amount for the package could amount to PKR15 billion (US$0.17 billion) and the federal government would chip in 50% while the provinces will contribute the remaining.