November 15, 2011

The Pakistani government will establish the new wheat support price at PKR1,150 (US$13) per 40 kilogrammes from PKR950 (US$10.97) per 40 kilogrammes due to a significant increase in important input prices.

The significant rise in important input prices such as urea, DAP, pesticides, seeds and petroleum products has made wheat cultivation to incur huge losses for the farming community.

According to Alfalah Securities Limited, the wheat support prices have increased significantly from PKR650 (US$7.50) per 40 kilogrammes to PKR950 (US$10.97) per 40 kilogrammes in a span of four years while, the cost of inputs have increased by a massive 100-300%. After a hike in wheat support prices by PKR200 (US$2.31) per 40 kilogrammes, the prices of wheat flour would also increase by PKR6 (US$0.07) per kilogrammes as a subsequent impact and would bring a jump in food inflation. Alfalah Securities Limited expects this hike would bode well for the farming community as their purchasing power would improve and would enable them to purchase the already expensive urea.