Bumper wheat crop likely

[Naveed Yaseen]

By Sabihuddin Ghausi
KARACHI, Dec 30: While no official word is available on expected wheat production next spring, market operators, traders and millers are confident of getting a 24 million to 25 million tons harvest and are pleading the government for removal of 25 per cent cash margin on their banks loans to purchase wheat.

“Farmers in Punjab are set to harvest a bumper crop next spring,’’ Bilal Sufi from Lahore informed. He is a senior leader and adviser to the Pakistan Flour Mills Association (PFMA). “Instead of 25 per cent cash margin we are asking for a ten per cent margin,” he said.

Millers want next wheat year -- from April 2009 to March 2010 -- a entire restriction free period in which wheat movement be allowed between the provinces and between districts in every province. “The government should control effectively only international borders to check on smuggling and not within the country,’’ Bilal suggested.

Traders estimate wheat economy at more than Rs120 billion if all factors are taken into account, which is transport, grain bags, handling and storage. Abundance of grain, they say, is a greater challenge than scarcity as the government, both at the federal and provincial level, is found wanting in governance and administration.

Bilal’s plea is that a bumper wheat crop may put farmers under pressure. The Punjab government may procure from 5 to 6 million tons while Sindh Food Minister Mir Nadir Magsi is asking for one million tons procurement likely to begin from February 2 next.

“I am not agriculture minister,’’ he replied when asked to give his assessment of wheat crop in the province. “But as an agriculturist my assessment is that crop is pretty good though there may be some losses in a few parts because of rains.

His explanation is that as compared to other provinces, Sindh has a higher underground water table and rains in December and January can do more harm to the crop.

“These rains may benefit crops in Punjab and Balochistan but not in Sindh,’’ he said.

Nonetheless, the Sindh Food Department is considering procurement of one million tons of wheat from farmers next spring. This would warrant a demand of more than Rs23 billion loans from the banks as the official fixed price is Rs23,120 per ton. The obvious intention of the Sindh government is to help farmers and maintain a minimum price level of wheat. But stocking wheat and its transportation is an expensive affair and would entail heavy financial impact on the provincial budget.

The Sindh Food Department held a meeting on Tuesday to make an initial assessment of crop and make out a case for presentation at the federal level.

Good quality wheat flour in Karachi is being sold at Rs35 to Rs36 a kilogram as against officially fixed price of

Rs26. “Desi wheat is being sold at Rs2,800 a 100 kg bag in open market and, therefore, good quality flour is priced at Rs35-36 a kg.

Market analysts believe that it will be real test of governance abilities of the PPP and PML(N) to ensure steady and uninterrupted wheat and wheat flour supply at existing prices next year and also to ensure a better return to the growers. The year 2007-08 was worst year when at the beginning the government exported wheat in anticipation of a bumper crop and ended up importing at much higher prices later.

For consumers, the year proved worst when the Punjab government imposed a restriction on wheat movement to other provinces for almost entire year.

Sindh too imposed an inter-district wheat movement ban immediately after the harvest, which caused immense hardships to consumers in Karachi. Traders and millers blamed Sindh ministers of reaping rich benefits from these restrictions.

http://www.dawn.com/2008/12/31/ebr2.htm