FOOD officials of Punjab and Sindh are bracing themselves for the worst to prevent a price crash of wheat as the state-owned storages are nearly full with last year’s stock, leaving no or little space for the newly arrived crop.

The only option they are left with is to acquire numerous private warehouses on rent to store the fresh stock they would procure from the farmers. The existing wheat stock is 5.345m tonnes, of which 2.830m tonnes is with Punjab and 928,000 tonnes with Sindh and small quantities with Khyber Pakhtunkhwa and Balochistan and 1.255m tonnes with Pakistan Agricultural Storage and Services Corporation (Passco).

The other option was of exporting the carry-over stock on a fast pace so as to complete the process before the arrival of the new crop. The ministry of national food security, according to its secretary, is negotiating with different countries for export of the surplus stock and that a contract with Tajikistan was signed early this month for export of 5,000 metric tonnes of the commodity. This is not enough. It was in January this year when the Economic Coordination Committee of the Cabinet (ECC) had allowed Punjab to export 800,000 tonnes wheat at a rebate of $55 per tonne and Sindh to export 400,000 tons at a rebate of $45 per metric tonne. But slow movement shows the exporters are not getting the right price.

Acquiring rented warehouses is not a simple affair for the rate of rent that the government is ready to pay is often much lower than what is asked for by the owners. In 2009, a similar situation has emerged and no one was willing to let his silos or godowns to the government at the official rate of Rs1.50 per sq foot per month. Later, the rent was revised to Rs 3.50 per sq ft.

The construction of modern storages can significantly reduce dependence on gunny bags because grains can be stored in bulk at such facilities

The provincial food officials are currently looking for warehouses, silos and godowns but what will be the official rate is not known. If no deal is struck, then a major chunk of the procured or purchased wheat may have to be stored in the open spaces with plastic sheets put on them, exposing the grain to the vagaries of uncertain weather and even theft. Flour mills can also help the government by providing their storages on rent but not too often.

Both the federal and provincial governments have taken adequate steps to enhance their grain storage capacity particularly in case of bumper crops. Sindh food minister told the provincial assembly last year that a large quantity of wheat stored in a government warehouse had to be disposed of as animal feed as it was damaged by rains and was unfit for human consumption.

The government, he said, had not built any grain storage between 2008 and 2013 because the construction cost was too high and his department could not afford it. If public sector entities construct modern silos for storage, the waste of grains will be minimal and farmers will not have to stand in queues for longer hours at procurement centres.

Grain storage is primarily in the public sector and is the responsibility of Passco as well as the provincial food departments. The construction of modern storages can significantly reduce dependence on gunny bags as well because grains can be stored in bulk at such facilities. Besides, the fumigation of grain can also be carried out with a great ease.

Data on agricultural storage capacity is sketchy but total wheat storage capacity in the public sector is estimated at about 5.2m tonnes, of which 1.3m tonnes is with Passco while 2.45m tonnes with Punjab, 0.71m tonnes with Sindh 0.16m tonnes with the NWFP and the rest with Balochistan.

The wheat crop is expected to exceed the production target of 26m tonnes set by the Federal Committee on Agriculture, as the weather was conducive and the farmers used new varieties. The current rain spell is beneficial for production of major Rabi crops, though rain coupled with hailstorm may adversely affect wheat crop.

However, the wet weather will cast a positive impact on standing crops such as wheat, gram and fruit orchards. The harvesting of wheat had already started in Sindh while the crop in Punjab and other parts of the country would be ready within one month. Federal minister for food security Sikander Hayat Khan Bosan recently said 27m tonnes will be produced this year against the set target of 26m tonnes.

Published in Dawn, Economic & Business, March 23rd , 2015

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