ISLAMABAD, Sept 23: Differences between the federal government and Punjab on the issue of wheat support price for the next crop are reported to have widened and may lead to a further rise in prices of wheat and flour over the next few months.

The Punjab government, it is learnt, is proposing a 60 per cent increase in the support price but the federal government is of the opinion that this may increase the overall inflation and push up the prices of food items.

The food inflation touched an all-time high of 34 per cent in August.

A source in the finance ministry told Dawn that the Punjab government had proposed to the federal government to increase the procurement price of wheat to Rs1,000 per 40 kg from last year’s Rs625.

Last year’s increase in support price, it may be mentioned had, pushed up the flour price to an average Rs24 per kg from Rs18.

If Punjab government’s proposal is accepted, the issue price of wheat to mills will be around Rs1,250 per 40 kg (including Rs250 incidental charges) which will raise the average price of flour to over Rs31 per kg, that too if there is no shortage in supply.

And the price of ‘Naan’ will then range between Rs8 and 11, the source said.

He said that such a high support price would also give a green signal to hoarders to stockpile wheat and create a shortage in the market.

An official in the FBR said that while big farmers wanted international price for their produce, they did not want international price of inputs and the government has to heavily subsidise fertilisers.

The big farmers have also opposed the levying of income tax on the income generated from the sale of their produce.

A source in the ministry of industry said the Punjab government did not take the federal government into confidence before announcing a 25 per cent increase in sugarcane price, to Rs80 per maund from Rs60, which would now become a benchmark for other provinces.

The source said that the next sugarcane crop would raise the sugar price to over Rs40 per kg in the market.

He said that big farmers of Punjab and Sindh were also pushing the government to take measures to arrest the declining price of rice in the domestic market on the back of a decline in the international market.

The ministry of food, agriculture and livestock has already moved a summary to the finance ministry to allow the Trading Corporation of Pakistan to purchase rice from growers for export to halt the decline in the market price.

Similarly, producers of edible oil are also refusing to accept the government’s request to pass on to consumers the decline in palm oil price in the international market.

Last year when the price rose in the international market, the millers and producers increased the price but this year they are refusing to reduce the price.

According to the source, the country will face another crisis-like situation if the government fails to act against cartelisation in various food items – from sugar to edible oil.

The source said that if appropriate measures were not taken the annual inflation would reach 20 per cent, instead of the projected 12pc in the budget.