An increase in the purchase of wheat is likely to increase the subsidy burden

An increase in the purchase of wheat is likely to increase the subsidy burden

LAHORE: The government will increase the subsidy burden by procuring 82 lakh 50 thousand tonnes of grain this year.

This year, it has been decided to acquire more than 30% of the total estimated estimate of 20 million tonnes of wheat and more than 60% of the crop will be brought to market.

From this month, the price of the fresh crop in Sindh and in Punjab has increased from Rs 32,500 per tonne to Rs 34,125 per tonne this month. The decision means that the federal government and the province have 2 trillion 81 billion 50 crores RS the new loans will get their purchase from banks at commercial interest rates to finance them.

This amount does not include the significant costs that the government will bear on bags, grain storage, transportation, handling and distribution, nor does it have to deal with such a large number of other issues as handling the purchase. Includes the cost of an action such as an accident or loss.

The new loans will significantly increase the total debt of Rs 775 billion from federal and provincial commodity operations, often known as 'wheat sector circular loans', previously acquired for public-sector purchases. ۔

Thus, the federal government and the provinces, especially Punjab, facing cash shortages, spend billions a year, besides supporting the twin goal of supporting farmers and subsidizing retail flour prices will accumulate a large enough debt throughout the year.

It is estimated that Punjab has spent Rs. 2 trillion 91 billion 200 million on wheat subsidy between 2012 and 2019 to help farmers and supply cheap flour in Afghanistan as well as across the country.

In 2019, the federal government and Punjab and Sindh together paid about Rs 50, 50 billion in wheat subsidy.

The decision to buy more wheat has come after the recent 'wheat flour crisis' which affected parts of the country, particularly Sindh and Khyber Pakhtunkhwa.

Because of this, the mills had increased their prices rapidly because the product had disappeared from the market despite a considerable amount of storage.

Prime Minister Imran Khan has attracted considerable attention from his government for the mismanagement of the wheat trade as the pictures of people coming out of flour on a winter morning to buy a store and buy a government supply truck are on the front page of newspapers. Were seen.

Over time, the government has become the 'real buyer' of domestic wheat and is pushing the private sector out of the market.


In addition, the price is also fixed on which both the public and private sectors buy the commodity from the farmers, making them profitable so that they can continue the production of wheat so that the food can be self-sufficient.

The scheme helps the government provide flour to consumers at affordable prices.

Dr Naveed Hamid, a prominent economist, says that the current purchasing system in Pakistan is the most expensive and ineffective in the world.

"Whenever the government enters the market, even if there is inefficiency, there are many other ways to achieve the goal of national food security," he said. Other countries have developed more efficient ways to help their farmers. What is it'.

He believes that the government should maintain minimum reserves to encourage maximum private sector participation in post-harvest supply chain and commodity handling.

He said that "the problem of price stability at the local level can be solved by setting up a trade exchange where farmers, traders, millers and the government can avoid price concerns through future contracts and free wheat in the years of scarcity." Exports should be allowed at the time of import and export. '

He said, "In the years of scarcity, if local prices are higher than import prices, the government can subsidize imports to protect farmers and if global prices fall, the government will ensure tariffs on imported wheat. So that the price of the flour does not matter.

He said, "this is a complex issue but an effective alternative can be found to protect both farmers and consumers and to ensure the protection of national food from those who benefit from the existing system".

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