Farmers to suffer as ECC approves 69% less wheat procurement target

The wheat growers will suffer as the Economic Coordination Committee (ECC) of the cabinet on Friday set the wheat procurement target at 2.5 million metric tons, 69% less than the previous year’s target due to Punjab’s absence. 

The ECC approved wheat procurement targets for the Pakistan Agricultural Storage and Services Corporation (PASSCO), Sindh, and Balochistan. 

As per news reports, Punjab did not submit its financing requirements or procurement plans. 

Procurement targets and support prices are determined by the provincial governments, but they require federal government approval to secure loans to purchase the commodity. 

Consequently, the cabinet’s premier committee approved loans of Rs275 billion for the procurement of 2.45 million tons of wheat.

The revised procurement target of 2.45 million tons is 5.4 million tons or 69% less than the previous year. The reduction is attributed to Punjab’s absence and the existing wheat surplus.

According to finance ministry officials, Punjab has not yet communicated its procurement targets or financial requirements. 

If Punjab abstains from purchasing at least 4 million tons of wheat, farmers might not receive the minimum support price of Rs3,900 per 40 kg, potentially leaving them vulnerable to lower prices offered by middlemen.

The World Bank has advised the Punjab government to limit its wheat procurement to 2 million tons to mitigate budgetary impacts. 

Punjab’s government has set the minimum support price at Rs3,900 per 40 kg for 2023-24, consistent with the previous year.

Punjab’s ECC representative stated the province is focusing on repaying past loans used for wheat procurement and will purchase wheat as needed.

On the other hand, the federal food ministry has concerns that the new 2.45 million ton procurement target, despite last year’s carry-forward stocks of 3.3 million tons, may not meet demand.

The ECC set Sindh’s procurement target at 1 million tons, a 28% decrease from the previous year, and allowed a Rs100 billion loan for procurement. 

Sindh has an existing debt of Rs77 billion from previous commodity operations and plans to purchase wheat at Rs4,000 per 40 kg.

The ECC established Balochistan’s procurement target at 50,000 metric tons and approved a Rs5.7 billion loan for the province, based on a wheat price of Rs4,300 per 40 kg.

For Passco, a target of 1.4 million metric tons was set, a 22% reduction from the previous year, with an approved Rs169 billion cash credit limit based on a price of Rs3,900 per 40 kg. Passco currently has an outstanding debt of Rs386 billion from previous loans.

Pakistan anticipates a wheat surplus this year, with cultivation exceeding the 22.2 million-acre target by 1.5 million acres.

The country has 4.7 million tons in stock, including 2.3 million tons in Punjab, 1.3 million tons with Passco, 510,000 tons in Sindh, and 320,000 metric tons imported by the private sector.