LAHORE, April 19: Wheat procurement is starting in Punjab on Thursday (today) amid fears of price crash owing to cut in the procurement target by the provincial government and a healthy crop size.

The Punjab government has slashed its target to two million ton for this season, which is 33 per cent less than the last year’s. The situation has triggered fear among the farmers that they are left mainly at the mercy of the private sector, which may not purchase wheat till price hits the bottom line.

The food department employees, however, sounded optimism with the claim that they would not let the price crash because of their active buying.

Almost all the arrangement are in place: gunny bags have been distributed, cash is ready and so are the department employees. The procurement target, they said, was big enough to sustain the momentum for a few initial weeks. The provincial government was also in the process of assessing the cost of increasing the target, which might help stabilise the market in the long run.

The department, they said, had already procured gunny bags for 2.7 million ton and rest of the arrangements could be made quickly should the target go up.

The farmers, however, contested the official claim saying that market realities did not match it. The government had entered the market with a meagre Rs26 billion, which was almost half of what it used to pump in the wheat market. It was expecting the private sector to fill the gap vacated by it, they said, emphasising that the private sector worked for profits rather than their (growers) protection. It would purchase the crop but only when its price slide enough to ensure healthy returns.

They also contested officially revised estimates of crop size and maintained that the government was revising them downwards only to stabilise the market by proving that crop size was less than earlier expectations.

“This is more of a market ploy, which cannot sustain too long. The next 10 days will clear much of the air and prove farmers’ fears right,” they insisted.

Market analysts supported the farmers’ point of view and based their fears on two factors: less procurement target and duty-free import of wheat. These steps had created a glut in the local market and there was no way to clear it, they believed. This glut would naturally press the price down and keep it there unless the government intervened in a big way and clear the mess of its own making. But, so far, it had chosen not to do so and let the private sector rule the market. This did not augur well for the wheat growers.

The government, which decided to leave market at the mercy of the private sector, had done nothing to facilitate it. Not even on the account of interest rate. The millers had been demanding some concession in interest rate but the State Bank of Pakistan had refused to oblige, they said.

Without any facilities from the government, how far the private sector could facilitate farmers remained to be seen, they said.

In fact, the wheat price had already started sliding in some pockets of southern Punjab, as the price there ranged between Rs360 and Rs380 per 40kg — Rs45 to Rs65 lesser than the officially declared price of Rs415, they said.