THE procurement of wheat has always been a hassle for farmers in Sindh. Successive governments have been unable to establish a system where public money, in the shape of the support price, reaches small and medium farmers so that they are not exploited by market forces.
While the Kharif season began from April 1, the government remains indecisive about wheat procurement; largely due to huge carry-over stocks from last year’s crop.
As of March 26 such stocks, according to Sindh food department officials, stood at 870,000 tonnes. This year there seems to be another bumper crop owing to good weather conditions. The official wheat price remains unchanged at Rs1,300 per 40kg.
The Sindh government procures a specific quantum of the crop at the support price. Growers, by and large, sell their grain in the open market or to middlemen to save time and get cash payments that they then use for cultivation of Kharif crops.
Ground realities indicate that the support price doesn’t reach farmers. It is pocketed instead by middlemen in collusion with officials from the food department. In addition, parliamentarians, ministers, top government functionaries and representatives of influential growers’ bodies get gunny bags, free of cost, that are meant for poor farmers.
Ground realities indicate that the support price doesn’t reach farmers. In addition, vested interests get, free of cost, gunny bags that are meant for poor farmers
Gunny bags are of particular importance as it is only after farmers get them that they are able to take their crop to the food department for sale.
Many cabinet members believe that the crop should not be procured this season in view of the carry-over stocks.
A possible reason why the Sindh food department hasn’t floated tenders for this season’s gunny bag purchase may be because it is believed to have moved a summary to the chief minister. It has requested approval for the procurement of 500,000 tonnes of wheat which is to be discussed in the forthcoming cabinet meeting.
Currently, there is no ban on the inter-provincial movement of wheat whilst exports of wheat remain open. There are reports that the Pakistan Agriculture Storage and Supplies Corporation also intends to procure 1.1m tonnes of the current crop.
But amidst reports that the Punjab government will procure 4m tonnes of wheat, anxiety among farmers is growing as the wheat crop in Sindh has been harvested and has reached the market. To quote a grower leader, Mahmood Nawaz Shah, wheat prices have declined to Rs850-900 per 40kg in the open market due to the missing crop procurement target.
Former Sindh agriculture secretary Agha Jan Akhtar contended that wheat in Shikarpur is being sold at Rs1,240 per 40kg which is an unacceptable price for farmers. Given the current rupee devaluation farmers will be at the losing end when selling their crop in the open market.
He also opposed the procurement, even 500,000 tonnes, of wheat considering the availability of stocks. He argued that since the government has statistics it must ensure equity in next season’s procurement — after linking it with area under cultivation and production in each district — coupled with civil administration’s oversight, to ensure transparency.
In February the Hyderabad accountability court sentenced flour mill owners for colluding with food officials in Mirpurkhas, in a wheat procurement case that had been ongoing
since 2011. The case has raised questions about over the entire procurement exercise as inquiries into past procurement practices continue.
Sindh Chamber of Agriculture Vice President Nabi Bux Sathio observed that hardly 5-10pc of farmers are actually able to get the benefit of the support price, otherwise it is mainly the traders who are provided gunny bags by those with vested interests.
“Food officials mint money by providing gunny bags to those who don’t own farmland or grow wheat. In connivance with officials, these people manage the paperwork in such a way that they win the support price. Ultimately, the price is shared with and amongst food officials while the government looks the other way,” alleged Mr Sathio.
He proposed the formation of committees led by deputy commissioners and having farmers as members to ensure transparency in the entire exercise.
Farmers with small landholdings usually borrow money from private lenders in the shape of farm inputs for cultivating crops. They settle their accounts by providing grain to the same lenders at a lower price.
So, growers are always hard-pressed to sell their crop at an inadequate price to settle accounts. The objective of the support price is to keep the price of wheat stable since the arrival of a new crop always suppresses price.
With the government’s presence felt in the market through the announced support price, traders are pressurised to offer a reasonable, if not an ideal, rate to growers.
Growers would, however be at the mercy of market players if the support price mechanism is completely done away with. This, in turn, may enable hoarders to store crops bought at low rates to be resold at higher prices in case of a shortage in the market.
Estimates from the Sindh agriculture department show that the wheat sowing target could not be met this season. Against a target of 1.15 million hectares, 1.047m hectares (91 per cent of the target) were sown in FY19 whereas 94.7pc of the target had been met the previous year. The wheat sowing target remains unchanged since FY15.
The province produced 3.64m tonnes of the crop last season against a target of 4.2m tonnes. The food department had procured 1.4m tonnes of crop with carry-over stocks of 360,000 tonnes last season.
Published in Dawn, The Business and Finance Weekly, April 8th, 2019