Urgent Action Needed on Wheat Support Price to Avoid $1 Billion Import Bill

Ministry Urges Swift Action on Wheat Support Price

The Ministry of National Food Security and Research has called on Prime Minister Shehbaz Sharif to quickly announce a new wheat support price and set procurement targets. The ministry warns that failing to act could lead to wheat imports worth over $1 billion.

This urgency comes from conditions set by the International Monetary Fund (IMF), which advises the government to refrain from intervening in agricultural markets. However, farmers are left uncertain about the government’s intentions regarding a minimum support price, making it difficult for them to plan for the upcoming Rabi season.

Potential Impact on Wheat Production

The Ministry of Food warns that without a clear wheat price and procurement plan, there could be a significant reduction in wheat planting this season. This might increase wheat imports, which have averaged $1 billion annually in recent years. In 2023, the government set the wheat support price at Rs3,900 per 40 kg, offering an 18% profit margin. Despite this, domestic wheat production consistently falls short of self-sufficiency.

IMF Conditions and Government Commitment

The IMF has recommended that Pakistan avoid setting support prices for agricultural products as part of a broader effort to deregulate markets. Finance Minister Muhammad Aurangzeb has committed to phasing out price controls by 2026. The ministry, however, has proposed that the government set the wheat support price for Rabi 2024-25 and then discontinue the policy from the next season to align with IMF agreements.

Policy Options on Wheat Pricing

The ministry has presented three options for the government:

1. Announce a profitable wheat support price for Rabi 2024-25 and set procurement targets.
2. Avoid setting a support price but allow wheat to be procured at market rates.
3. Refer the matter to the Economic Coordination Committee for a decision on wheat pricing and procurement.

The ministry emphasized the importance of making a decision before the Rabi season to ensure farmers have the confidence to plant wheat. Without this, Pakistan could face another year of costly wheat imports, worsening the country’s economic situation.

Conclusion

The Ministry of National Food Security stresses the need for quick policy action on wheat pricing to prevent a reduction in wheat sowing for Rabi 2024-25. Delaying this decision could lead to further reliance on wheat imports and strain Pakistan’s already fragile economy.