High urea prices cease heavy wheat export chances
STAFF REPORT IBD: Pakistan is expected to produce 24 million tons wheat this year, only one million less than the set target, however, the sky-high prices of urea forced the farmers to use this basic agri input for the crop about 50 per cent in quantity, otherwise the crop volume could have been over 28 million tons comforting the cash-strapped government to import over five million tons against heavy foreign exchange.
As far as year 2012 is concerned there would not be any wheat flour shortage as the aforementioned production is enough to serve the food requirements of masses that ranges between 22 to 23 million tons. There is also a carry forward stock of 4.7 million tons but under the available circumstances there is no guarantee for the coming years.
Certain quarters believe that without giving incentives to growers, the government cannot ensure food security in the country but the policies of the government are totally opposite to the required.
Wheat was sown on around 21 million acres this year against the target of 22 million acres. As per officials, 55 per cent of sowing was in time and 45 per cent was delayed mainly due to bumper crop in South Punjab and due to flood situation in Sindh.
The urea fertilizer was either unavailable or at a very high price, as per market sources, the price of urea fertilizer ranged between Rs 1500-2000 mostly on the upper side during the season that in the previous year did not cross Rs 1200. Use of DAP was dropped to 50 per cent this year due to its record high price of Rs 4200 per bag.
Masses would suffer in terms of costlier price of staple food wheat flour, on the other side farmers are not going to earn anything out of wheat crop that had become cash crop in last few years.
It is worth mentioning here that Pakistan was a country that used to import wheat but due to increased profitability in the crop farmers turned to it and now the country produce more than its requirement. But the situation can take a turn again in the present circumstances.
As per official sources cost of production, the wheat crop calculated by the food department is above Rs 950 at present that was between Rs 600-700 previous year so there is almost no profit for the growers in the support price of Rs 1050. Moreover, its not necessary that all the farmers would be able to sell their crop to the government, and definitely they would have to sell it in the open market, but not sure at what price.
Ironically, the government in April last had put GST on agri inputs that is the major cause behind costlier inputs. There is around Rs 500 GST in DAP price of Rs 4200 and Rs 250 in the urea fertilizer.
When contacted, Najam Ahmed Shah, Director Food Punjab, said that GST is not a provincial subject and is imposed by federal government but as far as procurement is concerned, he said, “we are preparing plans for the wheat procurement and will try to facilitate farmers as much as possible”.
When asked about the cost of the wheat production, he did not deny the figure of Rs 950 or above but refused to comment on federal government policies. However, he said that the government would have to plan capping agricultural inputs to ensure better production in future and as well as to curtail or at least sustain the prices of staple food for the masses.
STAFF REPORT IBD: