PUNJAB had met 78pc (13m acres) of its 16.5m-acre annual wheat-sowing target at the end of November. While the sowing was 3pc lower than it was last November, officials hope that the full target will be achieved in a couple of weeks.

Interestingly, Punjab has not been very enthusiastic about the sowing target given the massive wheat stocks that the country is carrying. But it does not want to miss its revised acreage target anyway. The federal government had fixed a target of 17.2m acres for Punjab, but the province spared 700,000 acres for what it calls crop-diversification efforts.

Punjab is also taking liberty with federal targets for a number of reasons. One reason is the impact of the agricultural subsidy package, which includes support for DAP fertiliser and certified-seed distribution. Other major reasons include favourable weather and the level of current stocks.

All these factors should improve the crop’s yield and neutralise the impact of the 700,000 acres that have been diverted to other better paying crops, the province believes.

Punjab is taking liberty with federal targets for a number of reasons. One is the impact of the agricultural subsidy package, which includes support for DAP and certified-seed distribution. Other major reasons include favourable weather and the level of current stocks

Punjab thinks that the agricultural subsidy package currently under implementation provides some financial relief to growers. This relief is bound to translate into better investment for the next wheat crop. Wheat, an easy crop that still gets relatively better yields and pays reasonably well, is expected to attract more investment.

Along with direct cash support of Rs5,000 per acre for growers, the package will also provide a subsidy of Rs500 per DAP bag. DAP off-take in October had reached an exceptional 489,000 bags, against the target of 169,000 bags. Sales in November, which are still being compiled, are expected to be in the same region. In fact, market forces have pushed DAP prices further down by Rs200 per bag .

From the pre-season price of Rs3,900, DAP has now come down to Rs3,200 per bag — a differential of Rs700 against the official estimate of Rs3,400 for each bag. DAP inventories had built up last season as the fertiliser was imported liberally and sales had stayed down.

The problem with the fertiliser is that if it is not sold at the time of sowing, it becomes a dead investment for importers. Therefore, Punjab’s agriculture bureaucracy thinks that the wheat crop has better chances of success this season.

Apart from that, the weather has also stayed ideal for seed germination. Temperatures in the province are ranging between 15 degrees Celsius to the high 20s, generating hopes for better germination of the crop.

Adding to the hopes for better germination is the fact that Punjab has distributed 100,000 bags of certified seed for free in 23,800 villages in the province, with one farmer in each village getting four bags. The seed’s yield potential is considered to be around 80 maunds per acre, against the provincial average of just under 30 maunds.

On the basis of these factors, the provincial agriculture department hopes that the target of 19.5m tonnes will be achieved despite the lowering of the crop’s acreage.

Officials think that maintaining the wheat support price at Rs1,300 per maund would not impact the crop’s size either, as the farmers are getting relief from multiple sources this season. Diesel prices are also down, making running tube-wells a bit easier for farmers.

Ample availability of water during the early rabi season and the province’s decision to transfer water shortages (if any) to the end of the season should restrict the use of tube-wells and further cut the growers’ cost of production.

Published in Dawn, Business & Finance weekly, December 7th, 2015