Wheat procurement in Khyber Pakhtoonkhwa

Direct wheat procurement

By Tahir Ali

(DAWN, Monday, 03 May, 2010)

THE delayed and lacklustre wheat procurement drive by Khyber Pukhtoonkhwa has left growers at the mercy of middlemen/wheat traders forcing them to sell their produce at rates lower than the procurement price of Rs950/40kg.

Farmers complain that wheat prices have declined in recent days and growers prefer to sell their commodity at public procurement centres. They want the government to make vigorous effort to purchase wheat directly from growers.

Haji Niamat Shah, senior vice-president of the Anjuman-e-Kashtkaran, KPK, was surprised that despite reduced prospects for a bumper wheat crop that should have triggered a price-hike, the commodity price was falling. “The lack of government’s enthusiasm to procure wheat this year is very troubling. It will expose farmers to private profiteers, deprive them of a fair price and discourage them from cultivating wheat the next year,” he said.

Officials said the government had a strategy to purchase the entire marketable surplus of quality wheat from farmers. “To meet the 0.3 million tons procurement target, the provincial government has initially ordered for one million gunny bags as it is unlikely to meet the target for various reasons,” said an official.“Reluctance of farmers to sell their crop, shortage of public procurement centres and lack of storage facilities generally hamper government attempts to meet annual wheat procurement targets,” he added.

Basher Badshah, a wheat grower, said smuggling to Afghanistan would have to be stopped and the procurement/payment process to be facilitated, if the government wanted to procure sufficient wheat.

Last year too, it was the same target but only 0.09 million tons of wheat was procured.

The official said 0.3 million metric tons of wheat at a cost of about Rs7.1 billion will be directly procured from the cultivators this year. “The Khyber Bank and the First Women Bank Limited have agreed to lend Rs3bn and Rs2bn at KBOR +two per cent to finance the procurement drive. Rest of the money will be provided by the account of the provincial food department or if needed, will be obtained from banks.

“This direct procurement will help save about Rs1.8 billion. We had saved Rs540million last year by purchasing around 90,000 tons directly from farmers. This saving will ultimately benefit the end-consumers,” the official added.

Due to lower production and procurement, the province is dependent for over 3/4th of its annual wheat requirements of over three million tons on Passco, Punjab government or imports.

This insufficient production is a financial burden on the provincial exchequer on purchase, transportation and subsidy of wheat. Total annual wheat procurement of around 2.5 million tons for the year will cost about Rs5.9 billion while the incidentals alone for it would be around Rs1.6 billion, official documents reveal.

In the financial year 2008-09, the province had incurred a subsidy of over Rs10 billion with Rs2.6 billion of subsidy on indigenous and Rs7.7 billion of subsidy on imported wheat.

“The province should grow more food, for which, it would have to increase wheat acreage, develop high-yielding seeds and mechanise agriculture. The land under wheat is around one fifth of the total cultivable land,” said Manzoor Ahmad, a farmer.

According to Shah Zeb Khan, another farmer, there should be more procurement centres. “The procurement mechanism should be made easy. If possible, farmers should be approached for wheat deals. Farmers’ bodies should be involved in the process,” he said.

Another farmer said many preferred to sell their produce to private buyers for easy and swift payments though they had to sell it at four to five per cent lower rates. He alleged that the food department purchased wheat mainly from these middlemen.

Inadequate storage capacity is also likely to hamper procurement. The food department has a storage capacity of about 0.38 million tons which is less than the required.

“Modern silos can reduce dependence on gunny bags because grains can be stored in bulk quantity. The government must construct modern silos and build godowns to augment existing storage capacity,” said Ahmad.