LAHORE, March 6: The federal government wants Punjab to reduce its wheat procurement target for the coming season, but the latter is insisting on increasing the same because of an expected bumper crop.

According to sources in the Ministry of Food, Agriculture and Livestock, the federal government, under a commitment to donors, wants Punjab to reduce its role in procurement. But Punjab is resisting the pressure on the grounds that it is expecting a very healthy, if not bumper, crop this year.

"If it reduces its target from prospective 3.5 million ton, it will only open wheat price to speculative pressure which may trigger a crash."

It may be mentioned here that the province has fixed a target of 3.5 million ton for the year with a provision of increasing it later if required. The federal government is, however, refusing to agree to the proposal. It had called a meeting on March 18 to sort out the issue, they said.

The federal government had agreed to meet any shortfall through imports, they said, and added: "It has promised Punjab to hold a meeting of all provinces in the first week of June to assess the situation and decide in-time import to keep the market stabilized. But, it wants Punjab to reduce procurement target to ward off donors' pressure."

The federal government has also agreed to delink support price from procurement price. Hitherto, support price is taken as procurement price, but not any more. The federal government has agreed to consider new procurement price which Punjab would come up with at the meeting.

Punjab wants to create a cushion over and above support price of Rs400 per 40kg to compete with private sector which has the liberty of adjusting price to market realities whenever they change. The federal government has agreed to the proposal and it will be finalized at the meeting.

Punjab is also arguing to increase procurement target on the plea that the country now has foreign market for its wheat. In 2000, when it had a bumper crop and procured 6.3 million ton wheat, it did not have a market for export. The situation has changed and it can now export much of surplus stocks, they claimed.

Punjab is also arguing that private sector may not be as keen as it was last year to purchase wheat, especially if the government does not show liberalism on commodity finance and crop turns out to be bumper. Crop in Sindh will decide the fate of crop price to a larger extent. Punjab must procure as much as it can because it ends up feeding almost the entire country at the end of the season.

The federal government wants to meet shortfall through imports whereas the Punjab government wants to procure domestic wheat and save farmers from any price crash, they said. The situation will only get clear after March 18, they hoped.