Situationer: Next flour season likely to become more challenging for Punjab

Published May 13, 2021
Beyond Punjab production and procurement, things are not as rosy as official reports are suggesting. — Reuters
Beyond Punjab production and procurement, things are not as rosy as official reports are suggesting. — Reuters

LAHORE: As Pun­jab completes 95 per cent of its 3.5 million tonnes wheat procurement target and may terminate the drive in a day or two, experts point out that next flour season may not be as trouble free as the government believes it due to over-optimistic crop size.

Beyond Punjab production and procurement, things are not as rosy as official reports are suggesting and many unanswered question still loom over wheat and flour market next season.

Counting the uncertainties of the next season, they say Pakistan Agri­culture Services and Storage Cor­poration (Passco) is struggling at around 690,000 tonnes or 58 per cent of its 1.25m tonnes target.

Sindh has so far procured around 750,000 tonnes against its target of 1.4m tonnes. The experts believe Sindh, which drew political mileage of offering higher price of Rs2,000 per maund against Rs1,800 by Punjab, might not be interested in going beyond the figure of 750,000 tonnes due to price factor. Sindh would be happy to save as much money as it can by keeping its procurement as low as possible, knowing well that it could later get cheaper wheat from Punjab.

Sindh’s procurement, price difference may put pressure on Punjab, rigging its calculations, warns a miller

This is despite the fact Pakistan is hoping for more than 27m tonnes, and Punjab is claiming to top 21.70m tonnes against 19.40m tonnes last year. Pakistan produced 24.94m tonnes of wheat last year, but ended up importing 3.61m tonnes at a cost of $983 million to keep the supplies intact.

As far as this season is concerned, the experts from Punjab think Sindh may throw the spanner in the procurement and supply chain efforts. Despite having a target of less than half of the Punjab’s procurement goal, Sindh authorities have not been able to achieve more than 53.57pc of its 1.4m tonnes target. Interestingly, Sindh had started procurement a month ahead of Punjab and was offering a rate of Rs2,000 against Rs1,800 per maund in the Punjab.

As mills in Sindh would naturally need this 750,000 tonnes of wheat and probably be fed from South Punjab, the private supplies may dry quickly. Since the province has procured wheat at a higher price, it would also be releasing it at a higher rate, close to Rs2,100 per maund, offering better prospects to traders in the south. All this would generate pressure on the Punjab and may rig its calculations, warns a miller from Lahore. The Punjab would do better to purchase more, beyond its current target, or else it may find itself in an uncertain and challenging situation later this year, he warns.

Second layer might be added by the over-optimistic calculations about the crop size, claims Majid Abdullah, another miller from the city. “Yes, crop size looks better if overall situation is any measure of it. The food department achieved its target easily, without any hassle. The millers got supplies for daily grinding smoothly and also made extra purchases of 750,000 tonnes. But one should not forget that rate of wheat did go up during the procurement month by Rs100 per maund from Rs1,800 to Rs1,900, which points out that picture was not as rosy as the official departments insisted. The millers would also be purchasing another 750,000 tonnes to complete their 1.5 million tonnes need for the season. How market would behave after Eid when the millers make purchases will complete the story of actual crop size,” he says.

The Punjab crop reporting service is yet to offer any credible explanation of its claim of additional two million tonnes of wheat in the province, a trader from Lahore, Mohammad Ramzan says, adding that the only scientific reason it has given is that wheat area increased by 3.25 per cent this year. But he warns it is still to come up with per acre yield figures, which can explain this over two million tonnes addition as until those figures are measured, firmed up and shared, uncertainty would continue hovering over wheat market at least on 21.70m tonnes production figures.

Published in Dawn, May 13th, 2021

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