Punjab has increased its wheat minimum support price by Rs250 per 40kg, from Rs1,950 to Rs2,200, to match Sindh’s.
The rise in wheat support price was approved by a circular issued a day before the provincial cabinet planned to convene on Monday (today). An official indicated that a summary for the purpose had been moved three days earlier.
The provincial government had previously suggested to the federal government that the national wheat support price be increased to Rs2,200 per 40kg, but the suggestion was rejected last week by the federal cabinet’s Economic Coordination Committee.
It means that the Pakistan Agricultural Storage & Services Corporation (Passco), a federal agency, will purchase wheat at the fixed rate of Rs1,950 per kg at the start of the Rabi harvest season.
Last year, Passco, which is responsible for maintaining strategic reserves and supplying the staple food to areas such as Gilgit-Baltistan and Azad Jammu and Kashmir that lack it, struggled to meet its 1.2 million tonne wheat procurement target in Punjab, despite having already decided against buying the grain from Sindh due to a price difference of Rs200.
The federal government had set the minimum support price for wheat at Rs1,800 per 40kg, whereas Sindh had set it at Rs2,000 per 40kg.
This season, Passco’s task will be made more difficult since not only Sindh, but also Punjab, which procures at least 3.5 million tonnes of grain, would offer Rs250 per 40 kilogramme more than the federal organisation.
Punjab food department officials are relieved by the hike in the minimum support price, as they had feared that the price disparity between Punjab and Sindh would lead to wheat smuggling out of the province. The significant disparity in grain costs between local and foreign markets, on the other hand, may encourage grain smuggling even outside of the country, according to officials.
Before the war, Russian and Ukrainian wheat, which is closer in quality to local varieties, was being sold for $383 a tonne (Rs67.4 per kg), with the two countries controlling around 40% of the grain export markets.
Financial arrangements for the wheat procurement effort, which is set to begin in April, have been established, according to food officials, who estimate that they will require roughly Rs209 billion to purchase 3.5 million tonnes of wheat at a rate of Rs2,200 every 40 kilogramme.