Thursday, March 31, 2011

Wheat procurement delay hurts farmers in Sindh

By Saleem Shaikh

KARACHI: Despite passage of the Sindh Food Department’s deadline, wheat buying activity has not started in most of the wheat growing districts of the province so far. However, the wheat farmers have undesirably started selling their produce to the middlemen and local traders.

On March 17, the food department had announced March 20 for launching wheat procurement in 15 wheat growing districts and that all necessary arrangements in this regard were made.

The food department spokesman said that 365 wheat buying centres have been set up to procure 1.3 million tons wheat.

But, wheat growers said that no such arrangements are visible anywhere in the wheat growing districts.

They also said that farmers, who have cleared their lands of wheat crop, visited food offices in their respective districts for obtaining jute bags came back empty handed.

Such unfavourable situation leaves the growers, particularly small ones, at the mercy of middlemen and traders, who exploit such situations in their favour.

Reports obtained from wheat growers indicated that wheat harvesting has begun from February 15 in Umkerkot, Badin, Mirpurkhas and parts of Sanghar.

But, absence of food officials, non-functional procurement centres and unavailability of jute bags has disheartened the wheat growers, who showed robust performance in wheat cultivation.

Nabi Bux, additional general secretary of the Sindh Chamber of Agriculture, said: “It has really disappointed wheat farmers that no efforts had been made by the food officials for setting up the wheat pick-up centres in the harvesting areas.”

Delay in wheat procurement hurts small farmers in many ways, who need to sell their farm produce as timely as possible.

Persisting uncertain situation in the province with regard to the Sindh government’s wheat procurement drive has paved the way for middlemen, hoarders and profiteers to capitalise the opportunity in their favour by purchasing wheat from farmers at the rates below the government support price.

Actually, these small farmers cannot hold back their harvested wheat for more than few weeks because of inadequate storage capacity. Holding the new wheat stocks until the government initiates procurement is not financially viable for them either.

By selling their produce, the wheat farmers do need to clear their debts, prepare their lands and buy farm inputs for the next crops to be on time, as a better crop performance is entirely reliant on timely sowing.

Many believe that unavailability of jutes bags had made the food department delay wheat buying.

Officials in the provincial food department said that procurement of jute bags had been put off for the time being due to imposition of 17 per cent General Sales Tax (GST) and 2.5 per cent Special Excise Duty (SED) on jute bags following presidential ordinance on March 15.

A senior official recalled that a tender had been floated on January 29 of this year for procuring 10 million bags, which were to be distributed among the wheat growers for wheat packing. But, there had been no progress on it.

“The jute mills had locked their minimum prices in their biddings against the tenders before the GST and SED. However, the 19.5 per cent duty has delayed the food department to respond to the tender biddings filed by the jute millers. This is a major reason behind the department’s inability to purchase the jute bags and make them available at the procurement centers,” he pointed out.

The jute bag dealers, who filed their biddings, have asked the food department to reconsider the prices as the same were agreed on the basis of zero per cent tax applicable at that time, he said further.

Sources in the food department, who preferred anonymity, said that although the jute bags are ready for delivery, the food department is yet to respond to the jute millers on the matter of jute bag procurement. However, they have suggested that the issued could be resolved by exempting the commodity from these new duties of 19.5 per cent to start procuring the wheat without any late.

Meanwhile, undue delay in the launching of wheat buying drive has also cast negative impact on the wheat prices in the local market.

According to wheat traders, arrival of wheat in bulk quantity in main urban grain markets from rural areas has pushed down the prices of the last year’s wheat in the grain markets.

Khair Mohammad, former president of the Larkana Chamber of Commerce and Industry (LCCI), told this scribe that the prices of the previous year’s wheat in the commodity market had fallen down sharply by Rs250-Rs300 per 100kg bag during last two weeks.

“Some two weeks back a sack of 100kg wheat bag was trading between Rs2,700 to Rs2,800 in the open market in different wheat growing districts. But, the same wheat bag is available for Rs2,400,” he detailed.

Wheat traders fear that falling wheat price trend, triggered off by glut of new wheat in the grain markets, might decline further to Rs2,100/100kg bag in next 10 to 15 days, if the provincial food department did not begin the wheat procurement.

Amid the falling grain prices on new supplies, the flour millers have also pulled down the flour prices. A 10 kilogramme flour bag, which sold for around Rs320 during third week of March, was selling for Rs300.

According to agriculture department, wheat sowing in the province has touched 11,00,000 hectares against target of 10,31,000 hectares and it hoped the wheat output will be around 3.8 million tons as against 3.682 million tons target.

Provincial agriculture officials said that despite every difficulty, farmers sown bumper wheat. But, lax attitude of food department regarding wheat buying activity has come as dampener for them (farmers), as they were hoping this season timely wheat procurement by the food department.

“Fruits of bumper wheat output, he warned, would go down the drain, if provincial food department failed to set up wheat pick-up centres without any delay,” Sindh Agriculture Secretary Agha Jan Akhtar warned.

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