LAHORE: At last Punjab enhanced its minimum support price of wheat by Rs250 per 40kg, from Rs1,950 to Rs2,200, to match it with Sindh’s.

The approval for the increase in wheat support price was given through a circular a day before the provincial cabinet was scheduled to meet on Monday (today). A summary for the purpose had been moved three days ago, an official said.

The provincial government had earlier recommended to the federal government to increase the national wheat support price to Rs2,200 per 40kg, but the proposal was rejected by the Economic Coordination Committee of the federal cabinet last week.

It means that the Pakistan Agricultural Storage & Services Corporation (Passco), a federal entity, will procure wheat at the rate of Rs1,950 per kg fixed on the onset of the Rabi season.

Last year, Passco, tasked with maintaining strategic reserves and supplying the staple food to areas such as Gilgit-Baltistan and Azad Jammu and Kashmir, that are deficient in its production, had faced difficulties in achieving its 1.2 million tonne wheat procurement target in Punjab, while it had already decided against buying the grain from Sindh because of a difference of Rs200 in the price there last year.

The federal governm6ent had announced Rs1,800 per 40kg minimum support price of wheat, but Sindh had fixed it at Rs2,000 per 40kg.

This season, Passco’s job will be more difficult as not only Sindh but also Punjab, which is the main player in the local grain market as it procures at least 3.5mt, will be offering Rs250 per 40kg more rate than the federal entity.

The increase in the minimum support price brings a sigh of relief for Punjab food department officials as they have been fearing that the Punjab-Sindh price difference will lead to smuggling of wheat out of the province. Whereas, the huge disparity in the grain rates in the local and international markets might encourage smuggling of the grain even out of the country, the officials apprehended.

The Russian and Ukrainian wheat, which is quality-wise closer to the local varieties, was being offered at $383 per tonne (Rs67.4 per kg) before the war started between the two countries having around 40pc share in the grain export markets.

The food officials say that financial arrangements for the wheat procurement drive, to begin in April, have been made as they will need around Rs209 billion to purchase 3.5mt wheat at a rate of Rs2,200 per 40kg.

Published in Dawn, February 28th, 2022