ECC gives nod to procure 4.5m MT more wheat

Decides to continue subsidies on essential edible items to cushion low-income people against soaring inflation

ISLAMABAD:

The government on Monday decided to procure an additional 4.5 million metric tonnes of wheat, including three million metric tonnes from abroad, and also allowed continuation of subsidies on essential edible items to cushion low-income people against soaring inflation.

The Economic Coordination Committee (ECC) of the Cabinet took the decision for more procurements after the domestic production fell short of target by 9% due to bad weather and shortages of inputs. Federal Minister for Finance Miftah Ismail presided over the ECC meeting.

The ECC allowed procurement of 1.5 million metric tonnes of wheat from the farmers and authorised the federal and Punjab governments to take Rs174 billion in loans, according to the Ministry of Finance statement. This will increase the total wheat procurements for this season to 7.9 million metric tonnes or 30% of the domestic harvest.

It added the cabinet body also approved imports of three million metric tonnes of wheat from Russia and other foreign destinations. At today’s price, the three million import of wheat will cost $1.2 billion, excluding freight and handling charges.

The imports will depend on the demand of the Pakistan Agricultural Storage & Services Corporation (Passco) and provincial governments to build up strategic reserves and to stabilise wheat prices in the country, according to the decision.

The finance minister directed the authorities concerned to frame modalities for financing and procurement.

The Federal Committee on Agriculture (FCA) in October 2021 had fixed wheat production target of 28.9 million metric tonnes from an area of 22.8 million acres.

The ECC was informed that due to less sowing area, drought conditions, shortfall of 28% of water, low fertiliser offtake and higher cost of production, provinces could achieve production of 26.2 million metric tonnes, showing over 9% production shortfall against the assigned target.

The national wheat requirement for the Food Year 2022-23 is estimated at 30.8 million metric tonnes including a quantity of two million metric tonnes of strategic reserves.

Of the total imports, the two million metric tons of wheat will be imported on government-to-government basis from Russia and one million metric tonnes through international tendering process.

However, in case of any sanctions on Russia, the government will import the entire quantity through international tendering.

The ECC was informed that Passco and Punjab had met their wheat procurement targets of 1.2 million metric tonnes and 3.5 million metric tonnes, respectively.

The ECC allowed Passco to procure an additional quantity of 500,000 metric tonnes with credit limit of Rs28.5 billion and permitted the Punjab Food Department to procure an additional quantity of one million metric tonnes with credit limit of Rs145.5 billion in the wake of low production of wheat in the country due to the previous government’s failure to provide fertilisers to the growers on time.

Further, the ECC chairman said that the Sindh government would be allowed to procure additional quantity of wheat, once it met the current procurement target.

In March this year under the PTI-led government, the ECC fixed the wheat support price at Rs2,200 per 40kg for procuring 6.9 million metric tonnes of wheat. It also allowed the provinces and the federal wheat procurement agency to take Rs375.7 billion loan from banks to buy wheat from farmers.

The Ministry of Industries and Production submitted a summary on revision of prices of wheat flour and sugar under the Ramazan Relief Package 2022.

In order to provide continuous relief to the lower strata of the society from global inflationary pressure, the ECC granted approval to revise prices of wheat flour and sugar, according to the decision.

The ECC approved to reduce wheat flour price by 16% or Rs150 per 20kg to Rs800. It also reduced the sugar price by 17% from Rs85 per kilo to Rs70 per kg.

It directed that the discount of Rs190 per kg on vegetable ghee would continue. The government will continue to absorb the cost in the shape of subsidy for the benefit of common man.

On another summary submitted by Ministry of Industries and Production on continuation of Prime Minister’s Relief Package 2020 for the months of May and June 2022, the ECC directed the Utility Store Corporation to continue selling commodities at Ramazan Relief Package prices as stock was available.

The inflation touched 25-month high of 13.4% last month – the continuous double-digit rate that has significantly eroded people’s purchasing power.