Govt raises support price for wheat to Rs2,200 per 40kg

ISLAMABAD: Amid political challenges, the government increased the minimum support price for wheat by 13pc on Thursday, with a public sector procurement target of 6.9 million tonnes at the cost of Rs376 billion.

The decision was taken at a meeting of the Economic Coordination Committee (ECC) presided over by Finance Minister Shaukat Tarin. The meeting also approved another Rs79bn funds, partly shared by provinces, for fertilisers and payments to Chinese power producers. Besides the finance minister, only two out of the 14 ECC members attended the meeting.

On a summary of the Ministry of National Food Security and Research, the meeting approved the increase in the minimum support price to Rs2,200 from Rs1,950 per 40 kilograms for wheat crop 2021-22. The ECC also set a wheat procurement target of 6.9m tonnes for the crop at a total cost of Rs375.7bn.

The wheat procurement target for Punjab was set at 4m tonnes, with a cash credit limit of Rs229bn. Khyber Pakhtunkhwa was asked to procure 200,000 tonnes from the Punjab food department with their own financial arrangements.

Rs376bn set aside for procurement of 6.9m tonnes

The Pakistan Agricultural Storage and Services Corporation (Passco) was given a target of 1.2m tonnes and its cash credit limit was also revised to Rs72.5bn from the previous limit of Rs65bn on account of an increase in the support price.

The ECC also set a target of 1.4m tonnes for wheat procurement by Sindh, with a cash credit limit of Rs77bn. The procurement target for Balochistan was given at 100,000m tonnes, with a Rs6.2bn cash credit limit.

On another summary of the food ministry, the ECC extended the date for subsidy disbursement to farmers on Kharif crop during the 2021 season on fertiliser (diammonium phosphate), cottonseed and whitefly-related pesticides under the prime minister’s package for agriculture in 2020-21.

The meeting was informed that the federal government had already released Rs3.89bn to the Sindh government and Rs541m to the Balochistan government. The meeting approved the proposal of subsidy disbursement until June 30, 2022.

The food ministry also submitted another summary on subsidy to farmers on fertiliser for Kharif crops during the 2022 season. The ECC approved a subsidy disbursement of Rs24.26bn through provinces using their existing mechanism on a fifty-fifty sharing basis for phosphatic fertilisers along with a direction to strengthen the tracking system. The federal government will provide Rs12.13bn.

The ECC also approved a Rs50bn supplementary grant to the power division for creating a special revolving fund account for immediate payments to independent power producers set up under the China-Pakistan Economic Corridor (CPEC).

The Chinese IPPs had been agitating for non-payments for a long time at the highest level and complaining about facing financing problems for procuring fuel, particularly coal, and meeting financial obligations to banks.

Before Prime Minister Imran Khan’s recent visit to China, the government had approved a payment of Rs100bn to Chinese IPPs and disbursed half of the amount (Rs50bn) with the commitment with the Chinese leadership to release more funds through the revolving fund.

After the China visit, Prime Minister’s Special Assistant on CPEC Khalid Mansoor had announced that the two most important and outstanding issues concerning the Chinese side — including outstanding payments to IPPs and revolving fund for automatic payments to financial institutions on account of debt and interest payment — had been addressed.