March, 22 2005	Tuesday	11 Safar 1426

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LAHORE, March 21: The Punjab government would not ban the inter-provincial movement of wheat this year, claim food department officials. This assurance has also been extended to federal government and other three federating units as well, they say. The assurance became possible when the federal government assured Punjab that it would convene a meeting in the first week of June to asses the stock situation and would place import order, if any, by third week of the month.

The centre has also asked provincial governments to come up with recommendations about maximum purchase price for the season. The federation has also asked provinces to constitute high-powered committee for finalizing such recommendations. Punjab, on its part, has already formed a committee.

About commodity finance, which plays major role in wheat trade, the officials maintained that Punjab has recommended the State Bank to continue with 50 per cent cash margin for investors this year too. It has asked for a 25 per cent cash margin for the millers and dealers.

The State Bank wanted commodity finance to be cleared by April 15 next year, but Punjab wanted it to recover it by Feb 28, 2005. It is because March is crucial for wheat supply, being last month before new season. Wheat supply would be greatly benefited if the bank could recover it by the end of February.

About possible role of private sector this year, they claim that it would be limited because of certain realities. On top of all is rising interest rates. Last year, private sector got loans at a rate of around 4 per cent. This year, it would not be less than 8 per cent.

The Karachi Inter-Bank Rate is already hovering at 6 per cent. Banks prefer to lend at least two per cent higher than that. Even the food department was getting loan at 7.25 per cent against 4 per cent last year. The rising interest rate would be a limiting factor for private sector this year.

A limit of 50 per cent cash margin from the beginning against 10 per cent last year would limit this role and so would be a firm commitment by government to import wheat by third week of June.

All these calculations can go wrong if there is a bumper crop as everyone was hoping before the current rain spell. It has shaken the confidence of planner to some extent. Though there may not be a big damage by this spell, but it could be a problem if it persisted for some more time.

Sindh crop is out of that cycle now and had already matured. But crop in Punjab would remain vulnerable to pest attack and grain shrivelling possibility for another two weeks. If there is no rain and temperature go little bit higher, the crop size could still be substantial, they hope. The department, on its part, is all set to receive crop from April 1. It has already started distributing jute bags (bardana) for the purpose.