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Dissatisfaction over
increase in wheat support price
By Aamir Kabir
An increase in wheat support price has always been a debatable
issue in our country and the current Rs50 per 40kg hike to
Rs400 is is not an exception. The government is of the firm
opinion that this move would help in improving production
and achieving self-sufficiency. But, can mere price-
enhancement help achieve these goals is a question being
widely discussed among the farming community.
The government's perception is that the rise in support
price will encourage higher investment and promote
productivity, thereby benefiting the majority of population
living in rural areas and safeguarding the interests of
consumers by making supplies available at reasonably stable
prices.
Independent analysts are of the opinion that the objective
of the government to enhance production through this process
has neither been achieved in the past nor could be this
time. As is evident from the table below, increase in
support price did not show any significant impact on either
yield or on area during the reported period of 1990-2004.
It is worth mentioning that the decision of farmers to grow
more wheat depends on the overall prices of cropping
patterns. It does not depend on the relative price of wheat
compared to other crops but on the relative price of wheat
inputs to other crops. The farmer does not look at one price
but he calculates the relative prices of various crops that
he can grow and also the expected profit margin. So it will
be wrong if one assumes that the decision of farmers to grow
any crop depends upon the support price alone.
It is due to this reason that farmers' organizations have
termed the government's decision 'not enough'. They have
complained that the government was importing wheat from
Australia, the United States and Canada at Rs506 per 40kg,
but was not willing to pay its own farmers the same price.
They say the support price increase is insufficient to
offset the increased costs of fertilizers and the water
shortage.
In 1999-2000, the government raised the wheat support price
from Rs240 to Rs300 per 40kg. Therefore, growers were given
a 25 per cent raise in a single year. The country harvested
a record production of 21.8 million tonnes of wheat in
1999-2000, which was not only sufficient for domestic demand
but there was also an exportable surplus.
Then there was no increase for following three years in the
official procurement price. Therefore, our policy-makers
increased the wheat procurement price in year 2003-2004 to
Rs350 for 40kg, anticipating that the increment would again
do a miracle for them. But, the result was not as expected
as the wheat production fell fairly short of the target
during 2003-04.
Agricultural analysts say that mere increase in price cannot
boost production because other important factors like the
subsidized electricity and fuel to overcome irrigation water
shortage to run tubewells, availability of fertilizers and
herbicides in abundance and at affordable prices, and
finally an assurance that the growers will get the
officially announced procurement price price of their
produce play a vital role in motivating farmers to go for
maximum output.
Therefore, besides increasing the support price the
government must also pay attention to maintain the cost of
production by watching critically the availability and
prices of agricultural inputs as increasing the support
price only is no solution. Further, the most important
requirement for achieving the desired wheat production
severe water shortage will not only affect the wheat-sowing
process but could also force farmers to lose interest in
investing in this crop.
It is estimated that the government will provide around Rs5
billion subsidy on one million metric tons of wheat imported
recently to meet domestic needs. If this huge amount is
spent on schemes which can either help improve water
availability or oblige farmers through some special package,
it can repeat the miracle of record high wheat production.
For an agricultural country like Pakistan, failure of
producing enough wheat to feed its population is a matter of
shame for the whole nation which needs to be tackled
sensibly not politically, if we are interested to regain the
repute of a truly agrarian state. Currently, wheat
consumption stands at nearly 19 million tonnes per annum
according to the internationally agreed data, which says
that a single person consumes nearly 126-kg flour annually.
According to a report, the population of the country would
exceed 151 million by the end of the current year and 165
million by next five years. Therefore, wheat requirement by
the end of this year, after adding storage losses and safety
stock, stands around 20.65 million tonnes and by the year
2009 to 21.85 million tonnes. In order to achieve these
targets we will have to manage things rationally and wisely,
not just by playing with the support price.
The rationale of the policy of minimum support price is
easily explicable. The Green Revolution called for
considerable outlay, on the part of the producers, on high
yielding varieties of seeds, fertilizer, water, pesticide
and so on, necessitated a stepping up of per hectare yield.
But higher output, the law of the market suggests, leads to
a lowering of market price. To save the enterprising farmers
from possible loss, it was decided to institute a minimum
support price to ensure an adequate profit for the farmer
after fully covering his cost.
In order to achieve these targets, there is a need, on the
part of the government, to draft a comprehensive wheat
policy through extensive participatory dialogue of all
stakeholders covering not only the minimum support price but
all other inputs like fertilizers, pesticides, certified and
high yielding seeds, water, etc., and focusing on overall
cost of production.
The growers on the other hand need to understand also the
social element of wheat pricing policy. The government
happens to be the main supplier of water from the irrigation
system, at a subsidized price; the government also supplies
fertilizer at a price lower than the cost of production and,
of course, it takes the initiative to supply the farmer with
high yielding varieties of seeds, again at throwaway prices.
The farmers should, therefore, in exchange be agreeable to
hand over to the government agencies a part of their produce
at government announced price. For the sake of the nation,
farmers should, however, remain satisfied with a price for
the procured part of output which normally remains less than
the prevailing market price.
The DAWN |
Pakissan.com;
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