Despite the proposed increase, the ECC chose to maintain the previous support price, citing the current economic scenario and the need for stability in wheat prices.
The Economic Coordination Committee (ECC) of the Cabinet has opted to uphold last year’s support price for the wheat crop 2023-24, dismissing the Ministry of National Food Security and Research’s proposal to increase it to Rs 4,000 per 40 kg.
The decision comes after extensive discussions with provincial governments. It is based on the rationale that a substantial increase had already been granted in the support price during the previous fiscal year.
Sources reveal that the Ministry of NFS&R had recommended the higher support price following consultations with provincial governments, proposing a rate of Rs 4,000 per 40 kg for the upcoming wheat crop. However, the ECC, in light of discussions with the provinces, opted to maintain the previous year’s price of Rs 3,900 per 40 kg.
The Food and Agriculture Ministry, in a summary, acknowledged that the ECC had previously set the profitable support price for wheat at Rs 3,900 per 40 kg in the wake of the 2022 floods, allowing for a 44 percent profit margin against the average farmer’s production cost of Rs 2,495 per 40 kg. This significant increase was granted to alleviate the losses suffered by the agricultural sector and the rural economy, going against the average profit margin of 10 percent allowed in the preceding 11 years.
The ECC was informed that the Agriculture Policy Institute (API) had calculated the cost of production for the wheat crop 2023-24 at Rs 3,304 per 40 kg, a figure shared with provincial governments for their endorsement. The provincial governments, subsequently, submitted their recommendations to set the minimum support price at Rs 4,000 per 40 kg for the upcoming fiscal year.
Despite the proposed increase, the ECC chose to maintain the previous support price, citing the current economic scenario and the need for stability in wheat prices. The Pakistan Bureau of Statistics reported the average price of wheat at Rs 4,939.38 per 40 kg, and the International Grains Council revealed Black-Sea wheat prices at USD 245/MT (FOB) or USD 323/MT (CNF) at Karachi, equivalent to Rs 3,686 per 40 kg, including various charges.
To address the gap of 2.40 million metric tons in the demand and supply of wheat, the private sector has been encouraged to import wheat using their resources. As of December 4, 2023, 20 private vessels have arrived, carrying 1,147,795 metric tons of imported wheat. An additional import of 1.00 million metric tons is expected by the end of February 2024.
The Ministry of Finance and the Ministry of Commerce supported the Ministry of NFSR’s recommendation to set the profitable support price for the wheat crop 2023-24 at Rs 4,000 per 40 kg. However, the ECC’s decision to maintain the previous year’s price reflects the complex considerations involved in balancing the interests of farmers, the economy, and the overall food security situation in the country.
The delay in announcing the support price was attributed to the provincial governments’ delayed responses, despite the Ministry of Food’s contention that timely announcements are crucial for uniform support prices across the country.
The provinces had varying recommendations, with Punjab and Sindh proposing Rs 4,000 per 40 kg, Khyber Pakhtunkhwa suggesting Rs 4,100 per 40 kg, and Balochistan recommending Rs 400 per 40 kg, each based on their respective production shares.
The ECC’s decision to maintain the support price at Rs 3,900 per 40 kg underscores the complexities of balancing agricultural economics, regional disparities, and the need for stability in the face of challenges such as floods and supply-demand gaps.