LAHORE, April 19: The federal government on Wednesday increased the wheat procurement target for Punjab to three million tons, but the provincial government is persisting with its programme to procure two million tons.

According to sources in the ministry of food, agriculture and livestock, the federal government took the decision to avoid a possible wheat price crash and to let the market stabilise on higher side.

The wheat procurement drive is starting in Punjab on Thursday under fears of price slide due to a cut in the procurement target by the provincial government.

The federal government could only suggest a target and provincial government would act according to its own priorities, they said. In this case, the provincial government is ‘resisting’ the increase because of the mark-up cost involved.

“The provincial government thinks that huge interest payment will eat up its annual development plan (ADP) allocation and eventually cost its development plans,” they said.

Sources in the Punjab food department confirmed that instructions had been given to the provincial government to raise the target but it has its own fiscal compulsions. In any way, this does not mean that Punjab has refused to increase the target. It is just working out the cost of doing so and keeping a decision pending.

They, however, agreed that coming days will be crucial in setting the market trend. If Punjab delays its decision for 15 days, wheat price may slide. Time is of crucial importance, they agreed.

It is not only the increase in target that would stabilise the market but the federal government should also take a decision on wheat import duty, they claimed.

“The federal government may levy wheat import duty in a day or two,” said sources in the food ministry. The secretary of the ministry gave the assurance at a recent meeting of the standing committee of the National Assembly. But again, time will play a crucial role. He agreed that the Punjab government had been pressing for duty on wheat import for several months, but Islamabad, under its own commitment with donors, had not been able to oblige the federating unit.

The difference of opinion between the federal and provincial governments might create pressure on price, they feared.

The sources insisted that as an immediate measure to stabilise the prices, Punjab must increase its procurement target, which would send an immediate signal to the market and stabilise it on the higher side. Imposing import duty would not have an instant effect on the market.