Wheat support price may be fixed at Rs 800/40kg

[LRE]

Wheat support price may be fixed at Rs 800/40kg

* The decision will save foreign exchange
* Imported wheat priced at Rs 1100/40 kg

By Ijaz Kakakhel

ISLAMABAD: The government is considering an increase in the wheat issue price from existing Rs 625/40 kg to Rs 800/40 kg from September 2008 onwards, when the government starts releasing its stocks to flour mills across the country.

The existing open market rate of wheat in Punjab is Rs 750 to Rs 800 per 40 kg and in other provinces the price of wheat is above Rs 1000/40kg. As usual, the private sector would continue to supply wheat to flour mills till August 2008 and from September onwards the government would resume supply.

Officials of the Ministry of Food, Agriculture and Livestock told Daily Times here on Wednesday that if the government keeps wheat issue price below Rs 800/40 kg, then severe flour crises would rule the country. In such situation the people would not be able to get 20kg flour bag at the rate of Rs 600.

Even if the government starts releasing its stock at the rate of Rs 800/40kg, the existing 2.5 million tonnes wheat import would not be sufficient to meet country’s requirement and the government will have to import further 4 million tonnes.

Comparing the wheat prices with neighbouring countries, it is difficult for the government to ensure smooth supply of flour because of the price parity. “All wheat stocks would be smuggled to neighbouring countries,” the officials claimed.

The government should adopt realistic approach and increase the flour prices as required. The officials claimed if the government announced Rs 450/20 kg flour bag, the existing situation would be automatically improve.

The officials said the flourmills purchased the wheat at a rate of Rs 22/kg in open market and the provincial government of Punjab is asking them to sell the flour at a rate of Rs 19/ kg. They questioned that how it was possible to sell a product even below its cost of production. If the government announced Rs 25/kg flour price today, the existing crises would automatically disappear and no one would smuggle the commodity, the officials claimed.

According to the officials, the government had already announced importing 2.5 million tonnes at the rate of about Rs 1100 per 40 kg and would distribute in flourmills at lower rates. When the government was paying higher prices to growers of other countries, then why the government is not willing to provided fair prices to local growers. The officials also suggested increase in the existing wheat support price Rs 625/40 kg to at least Rs 800/40kg. It would encourage the local growers to produce more and they would be provided good return.

Higher wheat support price would help the government to save precious foreign exchange earning. They claimed if the wheat procurement price was not increased, the country might witness another severe wheat crisis as the government failed to procure wheat due to higher prices offered by the private sector to wheat growers.

http://www.dailytimes.com.pk/default.asp...008_pg5_13