KARACHI, March 8: While merchants from Punjab and the NWFP are negotiating purchase of wheat from fresh crop in Mirpurkhas and other places of lower Sindh at Rs550 to Rs580 for 40 kg, the Sindh government is gearing up to launch procurement drive from next Saturday at the officially fixed price of Rs510 for 40 kg.

According to the informed sources, the Sindh government has almost lined up Rs10 billion credits from the banks and is now negotiating the interest rates on competitive considerations.

“Some 327 procurement centres are planned to be set up in 16 wheat-growing districts of the province,” a well-placed source said. The government is expected to procure 0.7 million tons. Wheat production estimates in Sindh range from 2.5 to 3 million tons.

“What would be the farmers’ response to the Sindh government’s official wheat procurement at the rate of Rs510 for 40 kg, when merchants with bagsful of money are offering them Rs580, is a foregone conclusion,” a commodity market analyst said.

The only safeguard that the government has taken to protect market from speculators, hoarders and manipulators is by way of restricting bank credit to wheat traders.

But flourmills are being allowed bank credit to purchase wheat from farmers for grinding purposes and there is a fear that quite a few of these millers will get involved in trading and will also act as proxy of the big grain traders, market analysts apprehend.

Even otherwise, the traders, particularly those, who are in the network of top stockbrokers, are wallowing in money and manipulating grain and sugar market for last few years.

Market analysts compare the present wheat situation with that of 1997 spring when Nawaz Sharif swept elections and was thrown up with more than a two-thirds majority in the National Assembly.

But as soon as he took over and his government raised the wheat procurement price, the manipulators wreaked havoc in the market. Wheat and flour disappeared from the market and there were literally food riots for the first time in Pakistan. Quite a few flourmills in the NWFP were burnt down and grain was plundered from many warehouses.

This scene was repeated in parts of Sindh, including Karachi after the outbreak of unrest following the assassination of PPP leader Benazir Bhutto in Rawalpindi.

Bankers and commodity merchants in Jodia Bazaar are certain that farmers will not sell their wheat to the government procurement centres this season also. “The grain speculators are back in the market with their proxies -- the rural commodity brokers -- and are buying left and right even at Rs700 for 40 kg,” the market analysts said.

“The political leaders are heavily preoccupied in coalition formation, the real government is involved in scheming to keep status quo, while caretakers are indecisive and tentative when it comes to taking a decision for drawing up a clear next wheat policy,” the analyst said, adding that the speculators and manipulators had now a free hand to play their game in the market.

The market manipulators in Pakistan are now much more shrewd and cunning, well connected and enjoy a clout and influence that was never there in last more than five decades.

Last season, the manipulators literally controlled wheat market from May 2007 till this day and they seem to be firm in maintaining their hold. There are fears that if political uncertainty continues for a few more weeks, the wheat prices in market may jump to beyond Rs1,000 for 40 kg.