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Sindh meets its wheat procurement target

THE Sindh Food Department has met its 1.1m tonnes of wheat procurement target for the 2015-16 season, with its stocks rising to 1.48m tonnes from 0.38m tonnes carried over from 2014-15.

Simultaneously, the provincial borrowings from the State Bank of Pakistan swelled to Rs82bn, inclusive of Rs47bn of previous years.

The food department sources say for procuring wheat stocks this season, the provincial government borrowed Rs35bn from the State Bank of Pakistan. During 2014-15, 0.9m tonnes of wheat were procured.

The provincial government borrowed Rs35bn from the State Bank of Pakistan for procuring wheat stocks this season

To reduce its stocks, Sindh has been allowed to export 0.3m tonnes of wheat, with a 50-50pc subsidy to be shared by the federal government. A source confides that the food department has, however, proposed to the provincial government that it should ask the federal government to share 60pc of the subsidy; as the crop from the province is mostly exported to Afghanistan through a land route which becomes expensive for Sindh’s traders/exporters. Last year, the province exported 93,500 tonnes of wheat against a target of 0.4m tonnes. In this regard the food department has moved a summary to the Sindh chief minister.

Locally, Sindh releases 100kg wheat in a jute bag for Rs3,340 and in a plastic bag for Rs3,275; inclusive of subsidy.“Technically, another subsidy of Rs800 per bag is included in the issue price of Rs3,250. This is for fumigation, bardana, transportation, incidental charges and SBP’s mark-up,” argues an officer. If the government does not pay this Rs800 subsidy, he says, the issue price will go up to Rs4,050 per 100kg wheat bag.

While billions go into subsidy, farmers’ complaints about availability of bags and irregularities in distribution of gunny bags are common, delaying setting up of procurement centres. Even Sindh Food Minister Syed Nasir Shah recently conceded that the procurement process was hit by unusual delays and needed significant improvement.

The growers have to go through a cumbersome procedure to acquire gunny bags. It starts with an application to the district food controller (DFC) along with required documents – attested copies of form-VII to prove ownership of land, receipt of ‘dhull’ paid to revenue department), etc. A landowner gets a limited quantity of bags. If he has cultivated 200 acres of wheat, he would get bags for 50 acres, i.e. eight bags per acre or 400 bags in all. It is in line with official policy to procure 25pc of the total crop.

For 2015-16, the food department had fixed a procurement target of 1.1m tonnes, against the targeted production of 4.4m tonnes.

Growers pay a refundable cost (security deposit) for the bag. These expenses include delivery of crop to the procurement centre or godown, cost of loading and unloading, transportation, etc. According to farmers they pay Rs8,000 for the transportation of 120 bags from Matiari to Hyderabad, Rs50 for loading and unloading plus miscellaneous expenses that take the overhead cost to Rs108.33 per bag. This cost is to be deducted out of the support price.

“Influential individuals don’t even pay the cost of gunny bags, yet they are able to get the official wheat price in many cases,” says Haji Nadeem Shah, who didn’t get any gunny bags for wheat he cultivated in Matiari. Timely payments, he adds, are delayed deliberately to force growers to withdraw their demand for gunny bags and sell their produce to traders, who then sell it to the food department to make a quick buck.

For the last two years, says an officer, the support price was higher than the open market and therefore everyone was poised to sell their wheat to the food department. The Open market price varied between Rs1,050 to Rs1,100 per 40kg against the government’s rate of Rs1,300.

“Of course, in any political government every parliamentarian wants to sell wheat to the food department; even those growers who usually keep a certain quantum of crop for seed purposes preferred selling their crop to us,”
he adds.