Banks’ wheat funding spur prices in Pakistan
Pakistan Times Business & Commerce Desk

KARACHI: Growers have benefited from the State Bank Of Pakistan (SBP) policy on issuance of loans for wheat procurement resulting in an increase in the prices in the open market by Rs30 per 40 kg.

Sources said on Monday that the growers of the country especially Sindh were fetching better prices after SBP allowed scheduled banks to release credit for wheat procurement to flourmills and license holders.

Wheat prices in the open market of interior Sindh have reached Rs410 per 40 Kg against Rs380 prevalent a few weeks back. The open market rates of wheat have also crossed and support price of Rs400 per 40-kg being offered by the government.

"The growers were selling wheat to the middlemen below the support price of Rs400," added one source.

Sindh Food Department, the largest wheat procurement public agency in the province, has procured a remarkable 400,000 tonnes of wheat in one and half month against less than 100,000 tonnes in the corresponding period of last year. The wheat procurement target for current crop year is 500,000 tonnes in Sindh.

Commenting on the increase in open market price an official of Food Department said that there was a slight decline in wheat procurement after SBP decision to relax financing for wheat purchases. Nevertheless, there was no significant decline in wheat procurement drive as Rs400 per 40 kg was a competitive price and there was no cheating in the weight at public centres that attracts more sellers, the official said.

Meanwhile, looking at the bumper crop in the province, Sindh Food officials are considering moving a summary for increase in the target to 600,000 against existing 500,000 tonnes after the wheat procurement cross 450,000 tonnes. Although there is no shortage of wheat the provision of jute bags commonly known as bardana remains a vital issue in public sector wheat buying as it is the responsibility of the buyer to provide bags to the grain seller.

One analyst said that the Food Department got approval for the 450,000 tonnes bardana after struggle of two months and if they applied for the further bardana of 100,000 tonnes, it would take them another two months when the crop harvesting would be complete in the province.

Sources said that the crop harvesting was almost complete in Dadu, Nawabshah and Sanghar regions while it was in its full swing in Sukkur region.

In order to get things further organised during the procurement drive, a meeting of the food officials was held in Nausheroferoze on Monday that reviewed procurement measures being adopted in Sukkur region.

Meanwhile, sources said that wheat prices were likely to soften when Punjab harvest reaches markets. Punjab is the largest wheat-growing province of Pakistan.

The current price spiral has pushed up open market price of wheat in Karachi by Rs40 per 100-kg to Rs1065 from Rs1025 resulting in the increase of flour prices to Rs960 per 80-kg against Rs940.

Talking to News, Malik Naeem, Former Vice Chairman of the Pakistan Flour Mills Association (PFMA) Sindh Circle said that the State Bank should have announced the policy after completion of the targets by the provincial governments of Sindh and Punjab.

"Announcement of the policy would further effect the prices and the consumer will have to pay more for it," he said.

He termed the Sindh Food Department’s wheat procurement target of 500,000 tonnes unrealistic against the demand of more than 4.0 million tonnes in the province. "Punjab is procuring 3.5 million tonnes but Sindh Food Department had set a target of only 500,000 tonnes, that is totally unrealistic," he added.●