Islamabad:
The federal government on Friday set its wheat procurement target at 2.5 million metric tonnes, which was 69% below this year’s target due to Punjab’s absence from the campaign, and sanctioned loans of Rs 275 billion to buy the commodity.
The Economic Coordination Committee (ECC) of the cabinet has approved wheat procurement targets for Pakistan Agricultural Storage and Services Corporation (Passco), Sindh and Balochistan. Punjab did not share the funding requirement and wheat procurement plan.
Supply targets and support prices are approved by the provincial offices, but they need the permission of the center to take out loans.
The ECC approved the issuance of loans of 275 billion rupees to enable them to procure 2.45 million tonnes of wheat.
While transparency is at stake for the second day in a row, the Ministry of Finance did not issue a press statement after the CEC meeting. A day earlier, the ECC, headed by Finance Minister Muhammad Aurangzeb, approved additional grants of Rs 24 billion.
The Finance Ministry’s move to keep the decisions of the Greek Cypriot Council under the carpet is at odds with the Finance Minister’s own policy of media exposure.
The new supply target of 2.45 million tonnes is 69%, or 5.4 million tonnes, less than this year. Main reasons behind setting a low target were Punjab’s absence and wheat surplus.
Against last year’s target of 4.5 million tonnes, the ECC did not set any target for Punjab. A finance ministry official said the Punjab government is yet to respond to a request to share its procurement target and funding needs.
If the Punjab government decides not to raise at least 4 million tonnes of wheat, farmers will be at the mercy of middlemen and may not get the minimum price of Rs 3,900 per 40 kg. The World Bank has long urged the provincial government to limit wheat supplies to 2 million tonnes to avoid a huge fiscal impact.
The Punjab government approved the wheat procurement policy 2024-25 under which the cabinet fixed the minimum support price at Rs 3,900 per 40 kg for the year 2023-24, which remained unchanged from last year.
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The Punjab representative informed the ECC that the provincial government was in the process of withdrawing the earlier loans taken for the procurement of wheat. The spokesman said the province would buy the commodity as and when required.
The federal food ministry has expressed concern that the new supply target of 2.45 million tonnes would be insufficient despite carryover stocks of 3.3 million tonnes from last year, sources said.
The Express Tribune contacted Punjab Food Minister Bilal Yasin, but he was not available for comment.
Some members of the ECC were of the view that the federal government should not interfere in setting targets. However, the provinces have to borrow from the banks to buy the commodity, which is not possible without the involvement of the finance ministry.
The ECC set Sindh’s wheat purchase target at 1 million tonnes, down 28% from last year, and authorized the provincial government to take a Rs100 billion loan.
Sindh will buy the commodity from farmers at Rs 4,000 per 40 kg. It owes commercial banks Rs 77 billion due to commodity operations.
In December, the federal government decided to keep the wheat support price unchanged at Rs 3,900, but the Sindh and Balochistan governments refused to accept the decision.
The federal minister for national food security expressed reservations about the unilateral decisions taken by the two provinces, which created a distortion in the market.
Three different wheat support prices may destabilize the commodity market, according to Food Ministry officials.
The ECC approved a procurement target of 50,000 metric tonnes for Balochistan and imposed a borrowing limit of Rs 5.7 billion for the provincial government. The province’s cash limit of Rs 5.7 billion was fixed based on a wheat price of Rs 4,300 per 40 kg.
The maximum target of 1.4 million metric tons was approved for the federal government Passco, which was 400,000 tons, or 22%, less than last year.
The ECC approved a credit line of Rs 169 billion in cash for Passco, whose target was set at a price of Rs 3,900 per 40 kg. Passco already owes Rs 386 billion to banks for loans taken in previous years.
Pakistan is expected to have a surplus wheat harvest this year. Against the target of 22.2 million acres, the commodity was sown in an area of 23.7 million acres.
The country already has reserves of 4.7 million tons. Punjab has 2.3 million tonnes in storage, followed by 1.3 million tonnes with Passco. Sindh has a reserve of 510,000 tonnes. The private sector has imported 320,000 metric tons.
Upon the arrival of the new crop, the country would be left with stocks of 3.3 million tonnes, which could meet its needs without additional imports, the food ministry told the ECC. The crackdown on wheat smuggling helped maintain adequate safety stocks.
The government expects wheat production of 28 to 29 million metric tons this year. It will have total reserves of 32 million tonnes, meaning it will not need to import.
Expected production of 29 million tons is 3 million tons less than forecast. Punjab is expected to harvest 22.3 million tonnes against the target of 25 million tonnes.
Sindh will exceed the production target of 4 million tonnes. Khyber-Pakhtunkhwa’s production of 1.4 million tonnes is expected to remain 200,000 tonnes below the target.
Published in The Express Tribune, April 6u2024.
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