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Out in the open market
This year, Pakistan's wheat produce exceeds the local demand. But procurement is a big problem By Aoun Sahi Pakistan boasts of a bumper crop this year -- mainly due to the timely sowing of 70 percent of seed between Oct 25 and Nov 30, 2008, favourable weather and 16 percent more area under wheat cultivation than last year. The prime minister's timely announcement of Guaranteed Minimum Price (GMP) of Rs.950 per 40kg encouraged the farmers to bring 21.4 million acre more in Punjab under cultivation. The government revised the target of 25 million tonnes to 23.3 million tonnes. "Even though we are producing more than our demand, it still reflects negligence on the part of the policy makers," Ibrahim Mughal, Chairman Agriforum Pakistan tells TNS. He adds that the actual area under wheat cultivation this year was 22.6 million acres, 1.2 million acres more than what the government expected. However, despite the best weather conditions and an increase in the cultivated area, we have not been able to produce more than 25 maunds per acre which, by any standard, is very low." The government's initial wheat procurement target country-wide was 5.7 million tonnes (3 million tonnes from Punjab food department, 1.5 million from the Pakistan Agricultural Storage and Services Corporation (PASSCO) and 1.2 million tonnes from Sindh). "The initial target of 5.7 million tonnes would not have met the demand of 64 million people living in cities or those who consume bagged flour. At least 8 million tonnes of wheat is required to meet their demand. So, the government must double the wheat procurement target. Also, this year the private sector refused to procure wheat due to the high price," he says. "There are no serious buyers in the market. Therefore, at least 50 percent of farmers in my area are unable to sell their produce. The officials at the food department and PASSCO procurement centres have already met their targets and are not interested in procuring more wheat. And the price in the open market is comparatively low at Rs 820 per 40 kg," Muhammad Ismail Malik, President Farmers Development Association, Ahmadpur Sharqia, Bahawalpur tells TNS. A majority of growers are forced to store their stock in private stores -- and are hoping to export some quantity. Resultantly, a large number of tractor trolleys and containers have lined up outside wheat procurement centres in Bahawalpur. For the last month or so, Punjab's food departments have been unsuccessfully trying to make the procurement process easy for the farmers. "I've been waiting for my turn for the past five days," says Muhammad Ghani, 45, a farmer from Nurpur, Bahawalpur. "It may take another three days to sell my produce," he says, pointing to the container full of wheat parked on G T road. "Farmers who know influential politicians are able to sell their wheat in a day or two. At this point, I'm even willing to bribe the officials." According to a survey conducted by Punjab Lok Sujag and South Asia Partnership, farmers of Punjab have over 10 million tonnes of wheat available for sale from a total of 20 million tonnes produced. This is a quarter more than the procurement target of the two government departments -- Punjab Food Department and PASSCO. Although the food department has raised the target from 4 to 6 million tonnes and federal government's PASSCO has increased to 2 million tonnes, these departments are already overburdened with lack of finances, gunny bags, storage capacity and human resource, the survey states. The survey further stresses that even if the departments fully meet their present targets, around two million tonnes of wheat will still be available for the private buyers "who are in no mood to offer the farmers the support price fixed by the government". Abdul Majid Chaudhry, General Manager, PASSCO, says the corporation has procured more than 1.5 million tonnes from the 15 tehsils of Punjab. In the past, it bought a maximum of 0.8 million tonnes of wheat from here. "However, the Punjab food department that has a presence across the province had procured only 4.5 million tonnes till May 14. Rather, they have adopted a go-slow policy -- and are instead forcing the corporation to procure maximum amount of wheat." He admits that farmers are facing problems at the procurement centres but "we are trying to do something about it." Irfan Elahi, Secretary Food Department Punjab, claims the department is trying to facilitate the farmers by making the wheat procurement process hassle-free and quick. "More than 70 department employees have been suspended for being negligent and criminal cases have been registered against 24 officials." Also, he says, the department is "committed to procure the wheat till the last grain in Punjab." He adds the department was also considering exporting the surplus. The wheat price in Pakistani market at present is approximately 100 US dollars higher than the international market. Yet, the federal government and the Punjab government are planning to export surplus wheat this year. Experts speculate that the international price of wheat will fall. This, they say, is the main reason why the private buyers are avoiding procuring wheat from the open market. According to a report of International Grains Council (IGC), the wheat stocks across the world are estimated to touch an eight-year high of 171 million tonnes in 2009-10. The price of the commodity in the international market at present is not more than 225 US dollars per tonne while the rate of Pakistani wheat is around 332 US dollars per tonne. Interesting, Pakistan is still in the process of importing wheat. According to an official of Punjab Food Department, vessels carrying 170,000 tonnes of wheat reached the Karachi sea-port last week. "125,000 tonnes of wheat from Ukraine will reach Karachi in another day or two," he says. These consignments were ordered to meet the local wheat shortage three months ago at more than 350 US dollar per tonne." "The government must first meet the local demand of 21 million tonnes and another 1.5 million tonnes for sowing next year, before it decides to export. Additionally, Pakistan needs 1.0 to 0.5 million tonnes for poultry and cattle feed. Afghanistan will need between 0.5 and 0.6 tonnes, which will either be exported or smuggled from Pakistan," says Ibrahim Mughal. According to him, Pakistan will have no more than one million tonne of wheat in surplus which should be kept as buffer stock. "The government should rather export wheat products and bakery products, because these products are likely to fetch a better price." The News: Sunday ,24 may ,2009
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