Increase in wheat support price a ‘belated decision’

Farmers say late move will not help increase crop production

LAHORE: The new wheat support price, approved by the Economic Coordination Committee (ECC) last week, may have pleased the farmers, but the high price has sparked uncertainty among different lobbies, particularly those represented by the growers.

A majority of farmers called it a late decision, which will not help increase wheat production to reach the target.

“The decision should have come at least a month ago to enable growers to set their preferences accordingly. The peak season has already passed and the price hike will barely help crop cultivation to rise to 1.5 million acres,” said Ibrahim Mughal, Chairman of Agri Forum Pakistan, a farmer lobby group. The belated decision would cause a loss of billions of rupees to the nation, he added.

In a meeting last week, the ECC increased the wheat support price for the next crop to Rs1,200 per 40 kg, from Rs1,050. Many believe the change in price may take place any time and the ultimate loser will be the end consumer, who will be forced to pay a high price.

This season, the plantation of wheat is expected to be much lesser than initial estimates. According to Mughal, the next crop will merely touch 21 million tons and that too after the announcement of the new support price. Earlier, the output was expected to be somewhere around 20 million tons.

Initial estimates before the beginning of cultivation put production at around 23 million tons against consumption of 26 million tons. Late sowing after November 20 lowers yield by 20 kg per acre.

All lobbies associated with the wheat crop were unanimous in their view that the increase in support price was only a political stunt to win votes of rural populace in upcoming elections. They suggested it would have been wise to provide subsidy on agriculture inputs so everyone was satisfied, including the end consumers.

Flour millers have also hit hard the price hike, warning flour prices will rise to Rs40 per kg as soon as the new price mechanism is put in place. The new price will be for the next wheat crop, but the millers fear the price will be increased any time.

“This price increase will not help address poverty, instead it will never allow us to compete in international markets,” said Asim Raza, member executive committee of the Flour Mills Association Punjab.

The government would pay an additional Rs20 billion after the increase in support price, what if the same money was utilised for providing subsidies on fertiliser, diesel and other inputs to get a better and cheap crop, he asked.

The farmers have not been able to fully utilise their land for wheat sowing as sugar millers have been reluctant to purchase sugarcane. Most of the sugar mills have not started cane crushing this season, leading to reduced sales of sugarcane by the farmers and blocking of their money.

“Late crushing has slashed wheat cultivation area by 25% as farmers have not been able to sow the crop due to blocking of money in cane crop,” said Haji Ramzan, spokesperson for the Kissan Board Pakistan.

“Though Rs1,200 per 40 kg of wheat is not enough to turn the farmers into profit, but something is better than nothing,” he said.

He ruled out any major increase in prices or dismissed speculations of a bumper crop next season and said the ultimate loser would be the end consumer .

“Taking advantage of the new price, government departments will pocket billions of rupees and the farmers will stay where they are,” Ramzan said.

Published in The Express Tribune, November 27^th, 2012.