Pakistan’s federal government has significantly reduced its wheat procurement target for the upcoming season, sparking worries about potential shortages. The Economic Coordination Committee (ECC) of the Cabinet approved a target of only 2.5 million metric tons, a staggering 69%
decrease compared to the previous year.
This decision comes amidst a disagreement between the federal government and Punjab, the country’s largest wheat-producing province. Punjab declined to set an immediate procurement target, citing outstanding debts from past purchases. The federal government, however, maintains that Punjab’s contribution is crucial to meet national wheat needs. To compensate for the shortfall, the ECC sanctioned a loan of Rs 275 billion for the purchase of wheat by the Pakistan Agricultural Storage and Services Corporation (PASCO) and other provincial entities. Sindh and Balochistan set their own procurement targets, aiming to buy wheat from farmers at Rs 4,000 and an unspecified rate per maund, respectively.
Despite the lowered target, the federal government remains optimistic about wheat availability. The Ministry of Food points to a potential surplus this year, with cultivation exceeding the target area and existing stockpiles of 4.7 million tons. Additionally, a crackdown on wheat smuggling is believed to have bolstered domestic reserves.
However, concerns linger about the adequacy of the revised procurement target, particularly if Punjab remains out of the picture. The Ministry of Food acknowledges this risk, expressing apprehension that the combined purchase of 2.45 million tons might be insufficient, falling 28% short of last year’s figure.
The federal government’s decision to maintain the wheat support price at Rs 3,900 per maund has also been met with resistance from Sindh and Balochistan. These provinces might offer higher prices to incentivize farmers to sell their produce, potentially leading to inter-provincial competition for wheat stocks.
With the procurement season approaching, Pakistan faces the challenge of balancing its financial constraints with the need to ensure national food security. The success of this strategy hinges on resolving the disagreement with Punjab and potentially revising the procurement target if necessary.
Procurement Target
In response to reports appearing in a section of the press, the Finance Ministry here on Saturday clarified that there had been no delay in the decision-making process regarding wheat procurement targets.
“News stories appearing in a section of the press have given the misleading impression that ECC has delayed the decision on wheat procurement targets. There is no truth to these assertions,” the ministry said in a statement issue here.
The Economic Coordination of the Committee (ECC) of the Cabinet discussed the matters related to wheat procurement in its meeting held on April 4, 2024 and after considering the views of the relevant federal ministries, the members of the ECC felt that it would be advisable to include the provincial governments in the deliberations, as they would be responsible to implement the decisions on the ground. The meeting was therefore reconvened on April 5 and representatives of all the provincial governments participated, the statement added.
They provided updates to the committee on the latest situation relating to procurement of wheat in their respective areas and apprised it of their requirements for bank credit for the purpose.
The committee after detailed deliberations approved the procurement target proposed by the Ministry of Food Security and the provinces and the cash credit limits required for the purpose.
The relevant departments did not suggest any enhancement or reduction in targets presented by the Ministry of Food Security, neither did the ECC approve any such change.
The government of Punjab informed the Committee that it was closely monitoring the wheat situation in the province and had initiated procurement process. They further informed that the provincial government would continue to intervene to make sure that farmers are able to sell their produce at the support price level.
The ECC in its inaugural meeting resolved that all the matters brought before it would be deliberated in detail with a view to make informed decisions, instead of rushing through and rubber-stamping hasty measures.
The Committee would also continue to ensure that all the stakeholders are onboard before arriving at decisions which have far reaching implications. The detailed discussions during the meetings of the ECC on April 4 and 5, 2024 are reflective of this policy.