LAHORE, June 26: Former Adviser to the Chief Executive on food, agriculture and livestock, Chaudhry Shafi Niaz has calculated that procurement of about 3.5 million tons of wheat at the support price of Rs360 per 40 kg , while the market rate of the commodity was Rs390 and above, has caused farmers of Punjab a loss of abut Rs2.4 billion.

Talking to Dawn, Shafi Niaz, who has served in important government positions as well as international organizations, feels that there was no justification for the government's intervention by purchasing wheat at a low price when the farmers could sell it at a higher rate in the open market.

He said that if the government needed to buy wheat for building reserves or to meet some other obligations, it should have fulfilled its requirements by purchasing wheat from the open market instead of intervening to deprive farmers of their right.

The Punjab government has meanwhile procured about 2.4 million tons from its original target of 3.5m that has been cut down by half a million tons. The downward revision of the target and extension of the cut off date for procurement to September 30 has apparently been forced on provincial authorities by the prevailing high rates of the commodity in the market.

As for Passco, it has managed only 0.8 million tons from its target of 1.4m tons. Market sources and experts contend that Passco is unlikely to procure more because the organization is not geared for operating in a challenging market. It thrived in the past because of abundance of wheat in the market but finds itself at a loss to procure the commodity in a period of short supply.

Ch Niaz said that the figure of 19.77 million tons crop given in the Economic Survey seemed to be above the actual produce. Two factors were known: information about the expected shortfall and depletion of reserve stocks. These factors were instrumental in a rise of wheat price and after the harvesting of the crop "these factors started ruling beyond the guaranteed price".

According to the former adviser, due to the anticipated shortfall in the crop, wheat's price escalated to Rs400 per 40 kg and above in the open market.

Forcing farmers to sell at Rs360 for that quantity was unjust and inflicted a massive loss on the farming community, he said. According to Ch Niaz, procuring five million tons of wheat for Armed Forces, the Azad Jammu and Kashmir government and deficit provinces of Sindh, Balochistan and NWFP at the support price of Rs360 per bag of 40 kg was intervention that was not justified in any way.

Meanwhile the claim of a 19.77 wheat crop is being widely challenged. Dr Shafi Niaz does not suggest a figure but feels that the output has been less than the official count.

Dr Zafar Altaf, a former federal secretary of agriculture and currently a consultant on agriculture to some international organizations, places the total yield at not more than 15-16 million tons.

According to him, the last year's crop did not cause a price escalation of the commodity and the phenomenal rise in wheat price this year was evidence of a considerably short crop. He told Dawn that a price hike could only be triggered by a shortfall in the produce. "The federal government's decision to provide one million tons of wheat to Sindh is further proof of an all-round decline in the produce."

He said that NWFP had a shortfall of about 60 per cent and Balochistan also needed wheat for local consumption, but Sindh was supposed to be better off.