ISLAMABAD: The Economic Coorination Committee (ECC) on Monday decided to propose the Federal Cabinet Rs 1600/ minimum support price of wheat for 2020-21.
The ECC decision is enough to give a disappointing message to the farming community that the decision makers in Islamabad were either oblivious to the ground reality on the wheat situation or the agriculture sector was not among their priorities.
The farmers were expecting at least Rs 1700 minimum support price for the current wheat year.
They give high prices of inputs in support of their views to advocate some reasonable increase in minimum wheat support price. In their views, minimum support price of Rs 1600 for 40 kg does not meet their input cost so how the farmers can give preference to wheat over other crops.
Director Farmers Association of Pakistan (FAP) Rabia Sultan in her comments of ECC decision said “This increase of Rs 200 in wheat support.price is of no use. I wonder why the government is ready to pay hard earned foreign exchange to the farmers of Russia and other wheat exporting countries but it’s not ready to pay a fraction of it to the local farmers by fixing some reasonable support price of the crop”.
ECC decision of keeping minimum support price will leave Pakistan as an importing country at least for one more year.
The proposed minimum support price of Rs 1600 is totally irrational. It will discourage the farmers and force them to switch over to other crops, but end of the day it will make difficult for the government to buy the commodity at this rate from the farmers.
The wheat rates at present are around Ra 2250 per 40 kg in the open markrt and there seems no reason of downward trend in it next year if the crop size does not increase substantially which seems impossible at this support price of Rs 1609.
The official hand issued after the meeting said ECC decided to propose to the cabinet Rs 1600 as minimum support price (MSP) for wheat crop 2020-2021. It was briefed to the ECC that the support price mechanism plays a pivotal role in boosting wheat production as it stabilizes market and increases profitability of the farmers. Since 2010-2011, MSP for wheat has been revised 4 times. The new price which has been decided by ECC is close to the price recommended by Punjab, which is the largest producer of wheat in the country.
ECC was also apprised of the Status of wheat import by the Trading Corporation of Pakistan (TCP). ECC was briefed that till January 2021 TCP shall be able to secure 1 million metric tons of wheat through international bidding. On the request of MNFS&R, ECC decided that the initial allocation of TCP for the import of 1.50 MMT of wheat may be enhanced to 1.80 MMT to cater for the additional requirement of 0.30 MMT demanded by the KP and Sindh for shipment by mid-February. It was also decided that 300,000 MT of wheat shall be imported on G2G basis from the Russian Federation by PASSCO. ECC endorsed the request of Ministry of Food to import another 320,000 from Russia under the G2G arrangement but constituted a Committee of Secretaries of Finance, Commerce and Food Ministry to look into the possibility of import of wheat either by PASSCO or TCP. It was also decided that further tendering of wheat may be stopped and TCP may resort to GTG arrangement for additional procurement of wheat. Keeping in view the arrival of the new crop in March 2021, the forum decided that no vessel of imported wheat should be arranged either in public or private sector beyond February 2021.
ECC also decided to release 50% of the tariff differential subsidy to the Power Division. Finance Division has earmarked Rs.140 billion for 2020-21 as Power Division subsidy.
The release of Rs.65.8 billion demanded by the Power Division will be used for payments to the power producers in order to maintain adequate liquidity.
On the summary moved by the Ministry of Industries and Production for the determination of Gas rate for operations of Fatima fertilizer and Agritech, ECC decided that gas rate of Rs 772/MMBTU with Variable contribution margin@ 186 per bag may be offered to both the units for the period 3rd November 2020 onwards. It was briefed to ECC that GoP’s share at this gas rate has been estimated by NFDC on the basis of RLNG’s last notified rate for July by OGRA, which is approximately 0.42 Billion. Further, actual payment by GoP for price differential sum to SNGPL may vary due to difference in monthly rate of RLNG.
ECC granted approval for the sale of surplus power available at the incremental rate of Rs. 12.96/kwh to all industrial consumer categories, excluding zero-rated industrial consumers, on the incremental consumption over their respective historical consumption or established benchmark.
ECC also formed a committee consisting of Dr. Ishrat Hussain, Dr. Waqar Masood, Federal Minister for Industries and Production, Hammad Azhar, Federal Minister for Power, Omer Ayub, SAPM Nadeem Babar and SAPM Tabish Gohar to prepare a proposal to include K-Electric in the package. The Committee will also propose whether the package shall continue for one year or three years.
The committee will also analyze the need for any subsidy that will be involved in the package and source for arranging the same and all the issues that may come up in the calculation and distribution of that subsidy.