October 19, 2010

 

Pakistan likely to increase wheat support price

The federal government is likely to increase the minimum procurement price of wheat by Rs50 (US$0.58) per 40 kilogrammes to fix it at Rs1,000 (US$11.64) per maund, experts said.

 

The Agriculture Policy Institute (API) has calculated Rs833 (US$9.69) per maund wheat production cost in Punjab and Rs850 (US$9.89) per maund in Sindh.

 

Contrary to this, the experts said, the cost of producing 40 kilogrammes of wheat in Punjab is Rs790-795 (US$9.19-9.25) and Rs805-810 (US$9.37-9.43) in Sindh, thus, the difference in minimum procurement price will be substantial.

 

Sources in the Ministry of Food and Agriculture said that increase in wheat support price will also adversely effects cropping pattern of other crops, including, corn, sugarcane, sunflower and others as the difference of return between wheat and others crops would be widened, which discourage the farmers to cultivate others crops.

 

It may also bring substantial decline in the sugarcane crop, which would lead to increase in sugar import to meet domestic requirement as the farmers still waiting to get their money from the sugar mill-owners against the sugarcane crop they sold to them during the last crushing season, the sources said.

 

On the other hand, the import-export price parity is also not in favour of increase in the rates of domestic wheat. The present international wheat rates stood at US$303 per tonne, which after conversion into rupees comes out to be Rs910 (US$10.59) per maund, while domestic rates are Rs950 (US$11.05) per maund, thus, the domestic producers are already getting higher than the international market rates to their produce, they said.

 

The sources also said that this year Pakistan wheat production would not decline as the government has been giving Rs6,100 (US$70.98) per acre support to the flood-affected farmers.

 

This package included a bag of DAP fertiliser and two bags of urea fertiliser and 50-kilogramme wheat seeds, thus, wheat production is likely to increase this year following the support package of the government and natural levelling of agriculture land after floodwater recede, therefore, there is no need to increase the wheat support price, they said.

 

The country had already sufficient surplus wheat stocks and further increase in wheat support price will create difficulties for wheat procuring agencies, which have already stored their wheat in open places, they said

 

Similarly, the sources said, the world wheat production forecast is maintained at 644 million tonnes, which is some 33 million lower than last year, but still the third-highest on record.

 

World wheat stocks at the end of 2010/11 are forecast to decline by 13 million tonnes to 183 million, down by one million tonnes from August, but still the third-largest in the past decade.