LAHORE, May 25: The Punjab Food Department may terminate its wheat procurement at around 3.5 million ton against the original target of four million ton as wheat arrival at its centres has dropped, gunny bags distribution hit fag end and market price sustains high trend.

Should that happen, the Punjab Food Department would be the third official agency failing to reach its target, following the Sindh Food Department (stuck at 0.90 million against a target of 1.3 million ton) and the Pakistan Agriculture Services and Storage Corporation (Passco) reeling at one million ton against a target of 1.6 million ton.

Although the Punjab Agriculture Department is still sticking to its production figure of 18.60 million ton and insists that wheat shortage in the market is due to long list of competitive buyers rather than slide in production, wheat seems to be increasingly in short supply.

According to officials they have distributed gunny bags for 3.6 million ton but traditionally gunny bags of around 200,000 ton do not return. “If that remains the case, the department should be looking at around 3.5 million ton. With a carry over of 500,000 ton, it would start its next release season with four million ton in store,” says an official.

“The department has historically, if taken on average for the last 15 years, procured 2.8 million ton and released 3.2 million ton wheat,” explains another official. That means the department has procured 700,000 ton more than average procurement and 800,000 ton more than the average of the last 15 years. The department thus feels secure and is sure to see the rest of the season through.

“By October and November, rice and cotton traders also have to clear their stocks and throw commodity in the market. The international market is also not helping traders either. The Russian wheat is being sold at $244 per ton (around Rs925 per maund) and its future sales are currently at $255 per ton. So, traders may not find export much lucrative this year. By August fresh Russian wheat crop would hit the market. Given this scenario, the department hopes that all traders would have to exhaust their stocks by that time,” he said.

“The department might be able to see through this season but it will not be able to make liberal releases,” says a trader from Lahore. With the PML-N government in power, wheat shortage in any part of the country would have to be met by Punjab. So, it would not be panic situation as far as wheat supply situation is concerned but it would not be an easy ride either.

“It would be highly sensitive balancing act that the department would have to perform with these stocks especially if the international market rises at any point of time during the rest of the year,” he said.

“Domestic market prices have belied all departmental calculations (price, procurement and crop size) so far. If they catch the department on the wrong foot one more time, everyone would be in for trouble,” he warned.