ECC refuses to increase wheat support price
Sets procurement target at 8 million tons, maintains ban on gold import.
Finance Minister Ishaq Dar chairing the meeting of Economic coordination committee in Islamabad on March 11, 2014. PHOTO: PID
ISLAMABAD:
The government decided on Tuesday to keep wheat support prices unchanged at Rs1,200 per 40 kilogrammes, while approving a procurement target of 8 million tons for the new crop, a move that may create resentment among farmers but is seen as necessary to check staple food prices.
Decisions to these effects were taken by Economic Coordination Committee (ECC) of the Cabinet, which met with Finance Minister Ishaq Dar in the chair.
It is for the first time in six years that the farming community will not reap benefits of the increased support price – the minimum rate at which government agencies procure commodity from the farmers. In its five-year tenure, the PPP government had increased commodity prices manifolds, jacking it up from Rs425 per 40 kg in 2008 to Rs1,200 kg in 2012.
The last increase was announced just months before last year’s general elections when the PPP government raised the support price for wheat by Rs150 per 40 kg to Rs1,200, up by 14.3%. The decision not to increase the prices has been taken by the Ministry of Food in consultations with the provinces, said the officials.
According to various studies, a 10% increase in commodity prices results in a 3% increase in overall inflation.
The ECC approved the summary by the Ministry of National Food Security and Research for fixing procurement target for the wheat crop 2013-14 at 8 million metric tons. The federal government and four provincial governments will require Rs240 billion financing to procure the commodity from the farmers, according to the officials.
Big landlords remain the main beneficiaries of the government procurements as they sell their stocks at official rates while small farmers are often left at the mercy of middlemen, said critics who opposed the mechanism of determining support price while arguing to leave the determination of prices to market forces.
The ECC decided that the Pakistan Agriculture Storage and Supply Corporation will buy 1.6 million metric tons of wheat. Most of the procurement will be made by the Punjab government that will procure 4.5 million tons, followed by Sindh 1.3 million tons, Khyber-Pakthunkhwa 450,000 tons, and Balochistan 150,000 tons.
The ECC once again extended the ban on the import of gold till the end of the current month. The finance minister repeated his previous directions to the Ministry of Commerce, asking it to reexamine the issue holistically for submission of the matter before ECC in the next meeting, according to an official handout.
However, Dar asked the Commerce Ministry to lift restrictions on the export of gem stones.
The finance minister also directed the officials of the Ministries of Commerce and Industries to ensure shipment of export quota of sugar up to 500,000 tons. He said that both the ministries and State Bank of Pakistan should reconcile their data on sugar export. He also directed the Commerce Ministry to submit a comprehensive policy on sugar.
Published in The Express Tribune, March 12th, 2014.
The government decided on Tuesday to keep wheat support prices unchanged at Rs1,200 per 40 kilogrammes, while approving a procurement target of 8 million tons for the new crop, a move that may create resentment among farmers but is seen as necessary to check staple food prices.
Decisions to these effects were taken by Economic Coordination Committee (ECC) of the Cabinet, which met with Finance Minister Ishaq Dar in the chair.
It is for the first time in six years that the farming community will not reap benefits of the increased support price – the minimum rate at which government agencies procure commodity from the farmers. In its five-year tenure, the PPP government had increased commodity prices manifolds, jacking it up from Rs425 per 40 kg in 2008 to Rs1,200 kg in 2012.
The last increase was announced just months before last year’s general elections when the PPP government raised the support price for wheat by Rs150 per 40 kg to Rs1,200, up by 14.3%. The decision not to increase the prices has been taken by the Ministry of Food in consultations with the provinces, said the officials.
According to various studies, a 10% increase in commodity prices results in a 3% increase in overall inflation.
The ECC approved the summary by the Ministry of National Food Security and Research for fixing procurement target for the wheat crop 2013-14 at 8 million metric tons. The federal government and four provincial governments will require Rs240 billion financing to procure the commodity from the farmers, according to the officials.
Big landlords remain the main beneficiaries of the government procurements as they sell their stocks at official rates while small farmers are often left at the mercy of middlemen, said critics who opposed the mechanism of determining support price while arguing to leave the determination of prices to market forces.
The ECC decided that the Pakistan Agriculture Storage and Supply Corporation will buy 1.6 million metric tons of wheat. Most of the procurement will be made by the Punjab government that will procure 4.5 million tons, followed by Sindh 1.3 million tons, Khyber-Pakthunkhwa 450,000 tons, and Balochistan 150,000 tons.
The ECC once again extended the ban on the import of gold till the end of the current month. The finance minister repeated his previous directions to the Ministry of Commerce, asking it to reexamine the issue holistically for submission of the matter before ECC in the next meeting, according to an official handout.
However, Dar asked the Commerce Ministry to lift restrictions on the export of gem stones.
The finance minister also directed the officials of the Ministries of Commerce and Industries to ensure shipment of export quota of sugar up to 500,000 tons. He said that both the ministries and State Bank of Pakistan should reconcile their data on sugar export. He also directed the Commerce Ministry to submit a comprehensive policy on sugar.
Published in The Express Tribune, March 12th, 2014.