October 10, 2012

As overhead costs for farmers rose significantly during the previous year, Pakistan's wheat growers are seeking support price at PKR1,250 (US$13) per 40-kilogramme.

With an increase of US$60 per tonne, wheat price in the international market has already reached US$320 per tonne compared to US$260 a tonne last October 2011. This increase of US$60 per tonne has been mainly attributed to drought and wheat shortages in Russia and Central Asia.

Growers said the prices of fertiliser, diesel, water, seeds and pesticides have increased manifold leaving farmers in very bad financial condition. They need immediate government support," they added. According to Ibrahim Mughal Chairman Pakistan Agri Forum, the overhead costs for farmers have increased many times during a year. Accordingly, other overheads including power and fertiliser have also increased during the period, he added.

He said farmers are doing their very best for ensuring food security for the country and the government should seriously address their problems. On July 28, 2012 a meeting of Punjab cost of production committee for crops was held at DG Agricultural office and as per the cost of production it was suggested that minimum support price will be PKR1,210 (US$12.7) per 40-kilogramme for next season, he said. "At that time diesel price was lower... now it has reached PKR113 (US$1.18) per litre, therefore we demand wheat support price of PKR1,250 (US$13) per 40-kilogramme for upcoming sowing season," he added.

Wheat farmers in Pakistan are deprived of their rightful earning by the government which is delaying increase in wheat support price to at least PKR1,250 (US$13) per 40-kilogramme from current PKR1,050 (US$11) per 40-kilogramme," he said. Some PKR1,050 (US$11) per 40-kilogramme was the support price announced by the federal government in December 2011, when sowing was almost completed across the country. The government has failed to achieve positive results of increase in wheat support price, he added.

The delay in the announcement of rise in wheat support price has resulted in some 1.5 million tonnes decline in wheat production during 2011-12, he pointed out. "We agree to a support price of PKR900 (US$9.4) per tonne, if the government provides diesel, fertiliser, power and pesticides similar to Indian rates," he said.

Lower support price may also hurt wheat production in upcoming season as farmers will prefer other commodities to get more profit, Mughal said. "The government needs to announce new wheat support price as the earliest since the wheat sowing season is about to commence. Otherwise, not enough wheat may be planted in Pakistan which will create serious food security issues for the country, an analyst said," he added. Announcement of wheat support price to PKR1,250 (US$13) per 40-kilogramme will ensure self-sufficiency in food for the country and give farmers their rightful earnings for the wheat crop as wheat growers have always responded positively to a support price increase if it is announced before the sowing season. The country saw bumper wheat crops in those years.

Some US$60 per tonne is the international price increase of wheat from October 2012. Current price is US$320 per tonne FoB Black Sea versus US$260 per tonne FoB Black Sea one year ago. This translates into an increase of PKR300 (US$3.14) per 40-kilogramme in the middle part of Pakistan (Punjab) after adding port handling and freight. However, "we just need PKR200 (US$2) per maund increase in wheat grains," growers said.