Wheat is one of the most important crops in Pakistan, as it is the staple food for more than 200 million people and accounts for about 10% of the agricultural GDP. However, wheat farmers face many challenges such as low productivity, high input costs, climate change, pests, diseases, and market fluctuations. To protect the interests of wheat farmers and ensure food security, the government intervenes in the wheat market by setting a minimum support price in pakistan (MSP) every year.
The MSP is the guaranteed price that the government pays to the farmers for their wheat, regardless of the market conditions. In this article, we will explore the concept of wheat support price, the wheat production landscape, the government’s role in determining support prices, the wheat support price for 2024, the impact on farmers, the challenges and opportunities, the government initiatives and policies, and the international comparisons.
Understanding Wheat Support Price
The wheat support price is a policy tool that aims to provide a fair and stable income to the wheat farmers, as well as to encourage them to produce more wheat to meet the domestic demand and maintain the strategic reserves. The wheat support price is determined by the Economic Coordination Committee (ECC) of the Cabinet, based on the recommendations of the Ministry of National Food Security and Research (MNFSR) and the input from various stakeholders such as farmers’ associations, provincial governments, and experts.
The wheat support price is announced before the sowing season, which usually starts in October and ends in December. The wheat support price is applicable to the wheat procured by the government agencies such as the Pakistan Agricultural Storage and Services Corporation (PASSCO) and the provincial food departments. The wheat support price is not binding on the private sector, which can buy and sell wheat at the prevailing market price.
Wheat Production Landscape
Pakistan is the eighth largest producer of wheat in the world, with an average annual production of about 26 million tonnes. Wheat is grown on about 9 million hectares of land, which is about 37% of the total cropped area in the country. Wheat is cultivated in all the provinces of Pakistan, but Punjab is the largest producer, accounting for about 75% of the total wheat output. Wheat is a rabi crop, which means it is sown in the winter season and harvested in the spring season. The wheat crop cycle lasts for about six months, from October to April. The major wheat varieties grown in Pakistan are Faisalabad-2008, AARI-2011, Punjab-2011, Seher-2006, and NARC-2011.
Government’s Role in Determining Support Prices
The government plays a key role in determining the wheat support price, as it affects the production decisions of the farmers, the supply and demand of wheat in the market, the inflation and poverty levels, and the fiscal and trade balances. The government has to balance the interests of various stakeholders, such as the farmers, the consumers, the millers, the traders, and the exporters.
The government also has to consider the cost of production, the international price trends, the domestic demand and supply situation, the storage capacity, and the budgetary constraints. The government has to ensure that the wheat support price is high enough to incentivize the farmers to grow more wheat, but not too high to cause a surplus or a deficit in the market, or to increase the subsidy burden on the exchequer.
More Also like this: Rice price in pakistan
Maize Price in Pakistan Today 2024
Cotton Price in Pakistan today
Wheat Support Price in Pakistan for 2024
The ECC of the Cabinet has approved the wheat support price for Year 2023-24 at Rs. 4,000 per 40 kg, which is an increase of 4.1% from the previous year’s price of Rs.3,900 per 40 kg. The ECC has also approved the wheat procurement target for 2024 at 8.5 million tonnes, which is 13.3% higher than the previous year’s target of 7.5 million tonnes.
The ECC has justified the increase in the wheat support price and the procurement target by citing the rising cost of production, the expected increase in the domestic demand, the need to maintain the strategic reserves, and the favorable international price outlook. The ECC has also directed the MNFSR to ensure timely and transparent procurement of wheat from the farmers, and to coordinate with the provincial governments and the PASSCO for the distribution and storage of wheat.
Impact on Farmers
The increase in the wheat support price for 2024 is expected to have a positive impact on the wheat farmers, as it will enhance their profitability and income. According to the MNFSR, the cost of production of wheat for 2024 is estimated at Rs. 1,647 per 40 kg, which means that the farmers will earn a net profit of Rs. 353 per 40 kg, or a gross margin of 21.4%.
The increase in the wheat support price will also encourage the farmers to allocate more land and resources to wheat cultivation, which will boost the wheat production and productivity in the country. The increase in the wheat support price will also provide a cushion to the farmers against the fluctuations in the market price, which can be affected by factors such as weather, pests, diseases, and speculation.
Challenges and Opportunities
The wheat sector in Pakistan faces many challenges and opportunities, which require the government and the stakeholders to adopt appropriate strategies and policies. Some of the major challenges are:
Low productivity
The average yield of wheat in Pakistan is about 2.8 tonnes per hectare, which is lower than the world average of 3.4 tonnes per hectare, and much lower than the potential yield of 5 tonnes per hectare. The low productivity is attributed to factors such as poor seed quality, inadequate irrigation, inefficient use of fertilizers and pesticides, lack of mechanization, and climate change.
High input costs
The cost of production of wheat in Pakistan is high, due to the rising prices of inputs such as seeds, fertilizers, pesticides, electricity, diesel, and labor. The high input costs reduce the profitability and competitiveness of the wheat farmers, and make them dependent on the government subsidies and support prices.
Market distortions
The government intervention in the wheat market through the support price and the procurement system creates distortions in the market, such as price volatility, hoarding, smuggling, adulteration, and wastage. The market distortions affect the efficiency and transparency of the wheat supply chain, and create inefficiencies and losses for the government and the consumers.
Quality issues
The quality of wheat in Pakistan is low, due to the lack of proper grading, testing, and storage facilities. The low quality of wheat affects the milling and baking industries, and reduces the export potential of the wheat products.
Some of the major opportunities are:
Value addition
The wheat sector in Pakistan has a huge potential for value addition, as the country produces a variety of wheat products such as flour, bread, biscuits, cakes, noodles, pasta, and snacks. The value addition can increase the income and employment opportunities for the wheat farmers and the processors, and enhance the food security and nutrition of the consumers.
Research and innovation
The wheat sector in Pakistan can benefit from the research and innovation in the fields of biotechnology, nanotechnology, and information technology. The research and innovation can improve the quality and quantity of wheat, and develop new and improved varieties, products, and processes. The research and innovation can also help the wheat sector to cope with the challenges of climate change, pests, diseases, and water scarcity.
Regional cooperation
The wheat sector in Pakistan can explore the opportunities for regional cooperation with the neighboring countries such as China, India, Afghanistan, and Iran. The regional cooperation can facilitate the trade and exchange of wheat and wheat products, and promote the sharing of best practices, technologies, and resources. The regional cooperation can also help the wheat sector to address the common issues and challenges, and to achieve the sustainable development goals.
Government Initiatives and Policies
The government of Pakistan has taken various initiatives and policies to support the wheat sector and to address the challenges and opportunities. Some of the major initiatives and policies are:
Prime Minister’s Agriculture Emergency Program
The government has launched the Prime Minister’s Agriculture Emergency Program, which aims to enhance the productivity and profitability of the major crops, including wheat. The program has allocated Rs. 280 billion for the period of 2019-2023, and has four components: water.
Conclusion
Wheat is a vital crop for Pakistan, as it provides food and income for millions of people. The wheat support price is a key policy instrument that influences the wheat production and consumption in the country. The government has increased the wheat support price for 2024 to Rs. 2,000 per 40 kg, which is expected to benefit the wheat farmers and boost the wheat output. However, the wheat sector also faces many challenges and opportunities, which require the government and the stakeholders to adopt effective and sustainable strategies and policies.
The government has initiated various programs and policies to enhance the productivity and profitability of the wheat sector, and to ensure food security and nutrition for the citizens. The wheat sector also has a potential for value addition, research and innovation, and regional cooperation, which can improve the competitiveness and quality of the wheat and wheat products.
Frequently asked question FAQs
What is the difference between the wheat support price and the market price?
The wheat support price is the minimum price that the government pays to the wheat farmers for their wheat, regardless of the market conditions. The market price is the price that prevails in the open market, which can be higher or lower than the wheat support price, depending on the demand and supply situation.
How does the wheat support price affect the consumers?
The wheat support price affects the consumers in two ways. First, it affects the price of wheat flour, which is the main ingredient of many food items such as bread, roti, naan, etc. The higher the wheat support price, the higher the price of wheat flour, and vice versa. Second, it affects the inflation rate, which is the general increase in the prices of goods and services. The higher the wheat support price, the higher the inflation rate, and vice versa.
What are the factors that influence the wheat support price?
The factors that influence the wheat support price are the cost of production, the international price trends, the domestic demand and supply situation, the storage capacity, and the budgetary constraints. The cost of production is the total cost incurred by the wheat farmers to produce wheat, such as the cost of seeds, fertilizers, pesticides, electricity, diesel, and labor. The international price trends are the changes in the global wheat prices, which are affected by the production and consumption of wheat in the major wheat producing and consuming countries. The domestic demand and supply situation is the balance between the quantity of wheat demanded and supplied in the domestic market, which is affected by the population growth, the income level, the consumption patterns, and the weather conditions. The storage capacity is the ability of the government and the private sector to store wheat safely and securely, without causing any loss or damage. The budgetary constraints are the limitations on the government’s spending and borrowing, which affect the government’s ability to procure and subsidize wheat.
