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Khawar Ghumman

Dawn

Published Date: Nov 4, 2014

Doubts over benefits of wheat support price hike

ISLAMABAD: Over the weekend, the government increased the wheat support price from Rs1,200 per 40kg to Rs1,300 and imposed a 20 per cent
regulatory duty on import of the commodity.

While the government claims that the decision will help growers in rural areas, some experts say the move carries many risks which ultimately can turn out to be a lose-lose situation for both producers and consumers.

While some unequivocally term the decision politically-motivated, others call it unfair for consumers in urban areas.

Know more: Support price for wheat increased to Rs1,300

The
Executive Director of the Sustainable Develop­ment Policy Institute, Dr
Abid Qaiyum Suleri, said that with the implementation of the decision small growers in rural areas would be able to enhance their income. But at the same time, it must help ensure food security in the country.

But it didn’t happen when the previous PPP government took a similar decision.

“With
an increase in the support price, we have seen in the past that the input cost for growers in terms of costly fertiliser, pesticides and increased profits for the middleman, also swelled. Thus in the end the farmer doesn’t receive the intended profit.” But the increased support price surely affects consumers who have to pay more to buy flour.

Dr
Suleri agreed that with local governments’ elections in sight, the PML-N was trying to counter increasing popularity of the PTI by offering
better returns to the farmers, especially in southern Punjab.

Former
federal minister for trade and commerce, Humayun Akhtar Khan, is of the
opinion that for all practical purposes the decision would only increase inflation in the country. “I am all for a better price for the growers, but there has to be a fair deal for consumers as well.”

Explaining
the inflationary nature of the decision, Mr Khan said the government had imposed 20pc duty on the import of wheat which meant the commodity was available at a cheap rate in the international market. While announcing the decision, he added, the government didn’t elaborate how it would control the price of wheat for end-consumers.

Economist Dr Qaiser Bengali told Dawn that a better support price would help growers raise their annual income, but it would also translate into high
flour prices for consumers.

“I personally believe that the government should reform utility stores where people can purchase flour at controlled price.” Otherwise, the relief of billions of rupees which the government wanted to provide to the masses would be wasted somewhere
in between, he said.

Unfortunately, Dr Bengali said, the public sector had shrunk its role over the years about welfare of the common people and left them at the mercy of capitalist forces.

Source : http://www.dawn.com/news/1142308/doubts-over-benefits-of-wheat-support-price-hike