The Ministry of National Food Security and Research has appealed to Prime Minister Shehbaz Sharif to promptly declare a new wheat support price and establish procurement targets. The ministry warned that delaying this decision could lead to a $1 billion import bill due to insufficient local production.
The ministry stressed the urgency due to the International Monetary Fund’s (IMF) stipulation that the government should minimize its involvement in agricultural markets. This has left farmers uncertain about future support prices and procurement targets, making it challenging to plan for the upcoming planting season.
The ministry briefed Prime Minister Shehbaz that not setting a wheat price and securing procurement for the second consecutive year might deter farmers from cultivating sufficient wheat for local consumption, potentially necessitating over $1 billion in wheat imports.
In a recent IMF report, it was noted that both federal and provincial governments had preliminarily agreed to limit announcing support prices and procurement to essential food security measures only.Â
Finance Minister Muhammad Aurangzeb affirmed a commitment to the IMF to phase out government pricing for agricultural commodities by fiscal year 2026, highlighting that current policies create market distortions and discourage private sector activity.
Despite these commitments, the Food Ministry has proposed three options to the prime minister:Â
- Setting a profitable support price and procurement targets for the 2024-25 Rabi season in consultation with provinces,Â
- Announcing no support price but maintaining market-price procurement for this year
- Or deferring the decision to the Economic Coordination Committee.
The ministry also informed that if the current policy persists, it could lead to a significant decrease in wheat sowing, exacerbating the need for imports and impacting the balance of payments.Â
This situation is compounded by a general perception among farmers of reducing wheat cultivation due to policy uncertainties, potentially leading to a shortfall than in previous years.
According to the ministry, the estimated production cost for wheat is around Rs3,312 per 40 kg as calculated by the Agriculture Policy Institute. Despite previous support prices designed to ensure farmers a profit margin of approximately 18%, the lack of consistent policy application has left farmers wary of future government support.
To avoid these outcomes, the ministry emphasized the need for clear and immediate policy directives regarding wheat pricing and procurement from both the federal and provincial governments.
