LAHORE: Punjab seems to be racing towards meeting its wheat procurement target of 3.5 million tonnes as it has completed over 31 per cent of its target by Saturday night as daily wheat arrival has gone beyond 150,000 tonnes.

By Saturday night, the Food Department already had 1.1 million tonnes in its coffer. The bulk of it had come from three districts of south – Bahawalpur, Bahawalnagar and Rahim Yar Khan – as they had jointly contributed over 800,000 tonnes.

“The department this year quietly started procurement drive in the south, where the current in-charge of the drive had served in the district administration and knew the wheat production pattern of the area well and planned accordingly,” explains an employee of the department. The strategy served well and by the date the province historically starts procurement (April 15), the department already has 1.5 million tonnes in its kitty – it started the season with a carryover of 450,000 tonnes and added another 1.1 million tonnes in the first two weeks, he claims.

“Due to these reasons, Punjab may be encouraged to increase its target by another million ton or at least half of it,” claims departmental officials. The department’s purchase is going almost along the harvesting speed; Punjab has harvested and

trashed roughly 35 per cent of wheat and the department has procured 31 per cent of it.

“It is because of this healthy speed, Punjab is now deciding to let mills into the procurement. It has already asked the millers to start applying for the purchase permits, which it may start issuing from Monday. The department now wants the millers to buy something like 1.5 million tonnes, or more, so that

they do not run on the department as soon as the procurement ends. The department now feels confident enough to let other players into the purchase as it feels safe.

“The KP has also asked for 200,000 tonnes for its coffers and the Food Department is considering, with due provincial permission, to allocate it some district and let it buy for itself,” he claims and explains: “all these steps indicate provincial confidence in its capacity to get to the target and crop size.”

The Food Department has still been releasing wheat to millers, at least in the central and upper parts of the province, says a miller from the city. It would snap releases by April 20 in the Lahore district. It would then have price issue. The official release price is at Rs1,950 per 40 kilogramme, whereas market price is around Rs2,300 per 40 kilogramme.

The millers are bound to pass it on to the consumers and if they do, the price of flour will go up by Rs8.75 for each kilogramme. Thus, 20kg bag, being sold at Rs1,100, will see its price jump to Rs1,250.

This is coming crisis, which the government is going to have now. The only solution to keep it a little bit low is to let millers purchase as much as they can and keep the price a bit low due to market competition. But here again, the problem will be increasing markup rate.

The State Bank has added 2.5 per cent to it recently. Financing huge buying would be difficult for millers and, if they do not make substantial purchases, the department would feel the heat.

Meanwhile, the Punjab agriculture department, on its part, is hoping to harvest well over 20 million tonnes of wheat.

According to its officials, despite many negatives, weather helped crop recover and final figure might be better than what projections predicted in January this year. Fact remains that it lost half a million acres in acreage, suffered fertiliser crisis throughout the life cycle of the crop and later exceptional rise in mercury in mid-March. But January rains helped the crop recover most of the loss and then mercifully it did not rain as much as forecast in March.

Given all these variables, Punjab now hopes to harvest a crop well above the 20 million tonnes mark. Should that happen and the provincial food departments purchase enough wheat to see the next season, the country may see import requirement coming down, they hope.

Published in Dawn, April 17th, 2022