Wheat procurement and the consumers

Source: http://dawn.com/2008/04/07/ebr13.htm


By Sultan Ahmad

Prime Minister Yusuf Raza Gilani has raised the procurement price of wheat from Rs510 to Rs625 per 40 kilogramme--an increase of over 17 per cent.

He sought to quell the controversy over the wheat price by choosing the middle course between Rs510 which the caretaker government had proposed and Rs800 which the farmers had demanded. Some of the farmers had asked for Rs1000 per 40 kgs. While an increase in the procurement price will raise the income of farmers and farm workers, the floor prices in urban areas will go up.

To compensate industrial workers against high inflation, their minimum wages have also been enhanced to Rs6000. As many of the industries do not comply, the government will encourage trade unionism for pressurising the industry to pay minimum wages.

The success of procurement price-- utterly controversial for a long time—depends on the output of wheat which has to be close to official projections and not far short of that.

If the output is far short of the target and the national needs, growers will demand higher procurement price. But if the supply is adequate, all the parties can be reasonable. The last crop was over-estimated as it was below 22.5 million tones. And a lot of bitter controversy followed and wheat prices shot up..

A major factor determining the procurement price of wheat should be the cost of actual production that includes the cost of water , power, and fertilisers and other inputs. If all the cost factors go on rising and not accounted for, the farmers will feel discouraged and shift to cultivation of other competitive crops. The cost of living of those who survive on subsistence farming needs to be particularly taken care of.

When inflation is high and food inflation ranges between 12 - 18 per cent in many cities of Punjab and Sindh, small farmers need to be compensated. Steps should be taken not to let food prices aggravate inflation, as there is really no substitute for wheat as a basic food in Pakistan.

Now if the wheat prices are high, the movement of wheat has become even more expensive because of high cost of oil. So the transport policy should ensure that the high oil price do not translate into unrealistic high food prices.

The prospects of smuggling of wheat outside the country should also be kept in view, particularly to Afghanistan which is short of wheat and flour, and to the border districts of India. Earlier, wheat was exported when traders were told there would be half a million tones of surplus. But when it was revealed that there was no surplus, the smuggling did not stop, it continued. The administrative efficiency in checking smuggling, hoarding and profiteering is sadly lacking and needs to be improved.

Often the officials seek to profit by such inefficiency. The role of the local government is very important in checking smuggling but its performance is found to be grossly inadequate. The consumer who is ultimately the victim of all the social evils should be vigilant to curb such nefarious practices. The consumers feel helpless but if consumer resistance does not become a significant factor in our public life, smooth and equitable supply of the essential goods at fair prices cannot be ensured.

The government is trying to improve the distribution system through utility stores . It is also increasing the number of stores from under one thousand to six thousand. But their total number is inadequate to meet the needs of the country. However, one does not know whether the political parties in power can organise consumer resistance on a large scale in a country where shortages and scarcities are created even when there is plenty of stocks.

All official agencies need to work towards creating a fair distribution system and the political parties should realise that people cannot live by slogans alone.

To help the people, the prime minister has raised the minimum wages to Rs6000 from Rs4000 which is a substantial increase following the recent increase in wages. He has not specified whether all the farm workers are entitled to it or it applies only to industrial workers. Inflation hits all and not the better paid industry workers alone. It hits the middle classes hard. So all sections of the people who are not rich and can’t increase their emoluments automatically need relief. Finance minister Ishaq Dar has promised a new economic policy and relief to the hard pressed. Let us hope, he really helps people in fulfilling their needs.