Row between Centre, Punjab over wheat price persists

Punjab Food Authority wants to set wheat price at Rs1,300 per 40 kg

LAHORE: A dispute over the control price of wheat continues as the federal government appears to have rejected the Punjab government’s price demand.

The Punjab Food Authority, however, is standing firm on its decision that the price of wheat will be set at Rs1,300 per maund (40 kg).

On the other hand, the federal government has decided to sell more than one million tons of wheat to Pakistan Agricultural Storage and Services Corporation (Passco) at local rates, on which the Punjab government has expressed serious reservations.

Flour mill operators have demanded that the government should announce the control price so that the private sector can move forward with confidence.

Punjab Food Secretary Shaukat Ali recently met with stakeholders and it was suggested that before the initiation of wheat purchase, the government should announce the price so that flour mills can buy wheat directly from farmers, which would not only give the farmers a set price, but would also reduce the pressure of purchasing on the PFA.

Conflicts of opinion were also seen in the provincial cabinet, where some members were of the view that the wheat price might rise sharply if the government sets a high control price, which could lead to a strong public backlash, while few were of the opinion that prices should be increased because currently the PFA purchases wheat from farmers at Rs1,300 per maund and sells it at the same price, whereas previously it was selling wheat at a loss, to reduce food price inflation.

The government was bearing a subsidy of Rs400 per maund, which translated into Rs20 to Rs30 per bag, meaning that if the government is to keep wheat prices in control, it will have to bear heavy subsidies PFA went to the federal ministry for food security with its proposed price of Rs1,330 to Rs1,350 per maund but the federal body and PASSCO authorities did not agree to the price at the time.

Sources said the federal authorities had made the principled decision of selling wheat to their sub-department Passco at the normal price.

Passco currently has 1.3 million tons of wheat stock available and in the next few weeks it will buy another 1.1 million tons. Federal authorities want Passco to sell between 1 and 1.2 million tons locally, and if possible, take permission from the federal government to export 500,000 tons of wheat.

But the Punjab and Sindh governments are strongly opposing the decision of permitting local sales to Passco, claiming that this will lead to the food authority facing difficulties in exporting wheat. The provincial governments had also observed that Passco should focus on Balochistan, Kashmir and Gilgit-Baltistan.

In the past, Sindh and Punjab both sold wheat to flour mills at reduced prices to lower the final sale price, due to which an additional financial burden of billions had to be tolerated.

Punjab Food Minister Samiullah Chaudhry told The Express Tribune that his government is constantly in touch with federal authorities on this issue. “One thing is clear, that the Punjab government will keep pursuing the wheat price issue.”

He said an increase of Re1 per kg in wheat is expected, which should not worry consumers.

Published in The Express Tribune, April 26^th, 2019.

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