ISLAMABAD: The government on Friday revised the minimum support price (MSP) for the upcoming wheat crop to Rs1,650 per 40kg and decided to import another 400,000 tonnes to ensure sufficient stocks during the current season.
These decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh.
The meeting also approved settlement of Rs11.68bn outstanding dues to non-litigant employees of Pakistan Steel Mills (PSM).
In light of these two decisions on wheat, the minimum support price has increased by 17.85pc from Rs1,400 per 40kg for this year’s crop while additional imports would take the total wheat import subsidy beyond Rs25bn this year.
The total import quantities would thus increase to 2.2 million tonnes in the public sector against about 1.8 million tonnes already booked quantities.
Official sources said the MSP at Rs1,650 was agreed upon by the provincial governments, including Sindh, which was earlier advocating Rs2,000 per 40kg.
A few days ago the Economic Coordination Committee of the cabinet had recommended MSP for the next crop at Rs1,600 per 40kg which was not endorsed by the federal cabinet owing to opposition from the rural members.
On the instructions of the prime minister, the ECC held detailed deliberations on the overall demand and supply of wheat and firmed up decisions to stabilise local market and reduce the wheat flour prices across the country.
“The ECC approved Minimum Support Price (MSP) for the wheat crop as Rs1,650 per 40kg. At the same time, current release price was maintained at Rs1,475 per 40kg,” said an official statement.
The meeting was informed that the last tender of the Trading Corporation of Pakistan (TCP) had arranged about 1.5 million tonnes of wheat – starting with landed import price of about Rs1,850 per 40kg to about Rs2,000 per 40kg at Karachi port. After addition of incidentals and transportation costs, the average subsidy per bag would work out to be more than Rs500 per 40kg to be picked up by federal and provincial governments as subsidy.
Total import quantities would be around 3.2 million tonnes including 2.2 million tonnes in the public sector and more than 1.15 million tonnes in the private sector.
The meeting was informed that TCP’s four vessels carrying about 217,000 tonnes commodity had reached Karachi in October but no vessel was lined up for November.
About 12 vessels carrying 600,000 tonnes were due in December followed by 13 vessels of 680,000 tonnes in January.
The ECC also decided to hold all future discussions on wheat operations in close-door meetings of a special committee on the directions of the prime minister to ensure minimum inside information becoming available to the market players.
The decisions of this special committee would then be adopted by the ECC in its meetings instead of detailed debates by political and technocrat members to avoid politicisation of the subject.
The special coordination committee, as directed by the prime minister, was also “constituted to deal with import of wheat and its logistics and distribution to the recipient agencies,” an official statement said.
The committee led by Adviser to the Prime Minister on Finance Dr Shaikh would also include Adviser to the PM for Institutional Reforms and Austerity Dr Ishrat Hussain, Minister for Industries and Production Hammad Azhar, Special Assistant on Revenue Dr Waqar Masood, Minister for National Food Security and Research Syed Fakhar Imam and State Bank of Pakistan Governor Dr Reza Baqir.
The committee would also include secretaries of finance, national food security and research, communications, commerce, maritime affairs and railways as well as chief secretaries of Balochistan, Khyber Pakhtunkhwa, Punjab and Sindh for smooth coordination.
After thorough consultation, ECC also approved grinding ratio of wheat at the base level of 70:30. It was further decided that ratio for the refined varieties of wheat flour would be decided later by the coordination committee.
The ECC also approved aggregate release of wheat at the rate of 38,000 tonnes per day to the flour mills.
“Representatives of all the provincial governments were on board,” the statement said.
This included 25,000 tonnes by Punjab, 8,000 tonnes by Sindh, 4,000 tonnes by Khyber Pakhtunkhwa and 1,000 tonnes by Balochistan.
ECC also approved the request by the Punjab government to provide additional 700,000 tonnes of wheat, out of which 400,000 tonnes will be imported by TCP for Punjab.
Two days earlier on Nov 4, the Ministry of National Food Security and Research (MNFSR) reported that TCP had opened the sixth tender for 110,000 tonnes of wheat at a lowest bid of $286.2 per tonne, and after price matching the total picked up quantity would be 320,000 tonnes.
Interestingly, the ECC had recently allowed import of wheat from Russia on government to government deal at $292 per tonne.
The MNFSR also told the committee that there would be sufficient availability of wheat in the country by Jan 2021 and with the increase in supply, prices would be lowered eventually. It may be recalled that Punjab — the largest wheat producer — had recommended MSP at Rs1,650 per 40kg. Khyber Pakhtunkhwa and Balochistan had proposed Rs1,800 and Rs1,745 per 40kg, respectively, while Sindh had suggested Rs2,000 as support price for wheat crop 2020-21.
Wheat support price increase by 5pc is estimated to have about 1.5pc increase in overall inflation. The wheat flour prices have already increased by almost 50pc under the current government.
Published in Dawn, November 7th, 2020