Wheat los­ing edge over cot­ton, cane crops

The Pak Banker - - 4editorial - Ah­mad Fraz Khan

THE wheat crop has started los­ing com­par­a­tive price ad­van­tage vis-Ã -vis sug­ar­cane and cot­ton and is ex­pected to lose a chunk this sea­son. As a first sign, sow­ing is fall­ing be­hind the sched­ule. By mid-De­cem­ber, one month af­ter the dead­line, the prov­ince is still strug­gling with its tar­get of 16.89 mil­lion acres, be­ing short of one mil­lion acres.

As per of­fi­cial claims, farm­ers are still sow­ing the crop and might achieve the tar­get by the first week of Jan­uary. But the sharp de­cline in tem­per­a­ture, fall­ing close to zero de­grees Cel­sius in most parts of the prov­ince, will make ger­mi­na­tion of the seed al­most im­pos­si­ble for new sow­ing from here on. The farm­ers would hardly take the risk.

The pat­tern of sow­ing re­flects how wheat is los­ing the com­pet­i­tive edge against cane and cot­ton. Over 90 per cent of sow­ing deficit has come from the tra­di­tional cot­ton belt ar­eas fall­ing be­tween Mul­tan and Rahim­yar Khan. The rest has come from the cane area. It is largely be­cause of lu­cra­tive cot­ton prices, which touched whop­ping Rs10,000 per maund be­fore drop­ping by 10 per cent to hover over Rs9,000 per maund. The cot­ton prices are rid­ing high be­cause of drop in in­ter­na­tional and do­mes­tic pro- duc­tion and ex­port curbs im­posed by big play­ers like In­dia. Of late, In­dia has emerged as a big cot­ton ex­porter. Ev­ery time it squeezes sup­plies, huge de­mand from China drives the price up.

In­ter­na­tional cot­ton prices have risen steeply since the be­gin­ning of this sea­son. Av­er­age price over first four months of the sea­son re­mained 120 cents per pound, al­most twice as high as the av­er­age over the cor­re­spond­ing pe­riod last year.

In Pak­istan, where cot­ton pro­duc­tion fell around three mil­lion bales short of its milling re­quire­ment, the prices spike was even sharp.

The farm­ers in the cot­ton belt are thus wait­ing for the last pos­si­ble pick­ing, rather than va­cat­ing the fields for wheat. They are do­ing so with a jus­ti­fi­ca­tion that if they can squeeze two maunds of cot­ton, they would get over Rs18,000 for just wait­ing in­stead of sow­ing wheat.

The cane prices have shot up be­cause of its cur­rent short­age. The of­fi­cial in­dica­tive price stands ir­rel­e­vant. The farm­ers are de­mand­ing as high as Rs300 per maund, if the millers are to be be­lieved, and are keep­ing the sup­plies squeezed. The millers are only them­selves to be blamed for the sit­u­a­tion.

They have con­vinced farm­ers and con­sumers dur­ing the last few years that there was no link be­tween the cane cost and sugar price. No mat­ter at what price farm­ers pro­vide cane, the millers would set the sugar price and mul­ti­ply their prof­its.

Each year for the last few years, the farm­ers have re­pented sell­ing cane at cheaper rate when the millers sub­se­quently made bil­lions of ru­pees by ma­nip­u­lat­ing the sugar mar­ket.

This year, the farm­ers want their pound of flesh. They have in­creased the price to what­ever limit they pos­si­bly can bar­gain for, and also re­fused to har­vest crop till they get price of their choice. They are even risk­ing next sow­ing to en­sure max­i­mum prof­its on this sea­son's cane. In the strug­gle, wheat sow­ing has be­come causal­ity.

Wheat loos­ing its fi­nan­cial sheen re­flects the fact that mar­ket forces are now de­ter­min­ing the crop­ping pat­tern. But, one should not lose the con­text in which these changes are tak­ing place.

Un­for­tu­nately, they are hap­pen­ing for wrong rea­sons. One of the rea­sons is the carteliza­tion of agri­cul­ture trade, where traders and man­u­fac­tur­ers are mak­ing bil­lions of ru­pees at the cost of farm­ers and con­sumers. The farm­ers are re­spond­ing to the phe­nom­e­non by form­ing their own car­tels as proven by cane sup­ply and price. More­over, the tra­di­tional agri­cul­ture set-up is col­laps­ing in Pun­jab and farm­ers are try­ing to fill the gap by tak­ing charge of the crop­ping pat­tern.

The pro­vin­cial govern­ment needs to re­alise that it can­not al­low carteliza­tion of agri­cul­ture and its trade. It first ig­nored the sugar millers who fleeced the com­mon man and is now al­low­ing farm­ers to form car­tels. It needs to act now to check these un­de­sir­able trends from strik­ing deeper roots in the mar­ket and mak­ing corrections all the more dif­fi­cult. Co­or­di­na­tion be­tween the pro­vin­cial and district gov­ern­ments also needs to be strength­ened to en­force cen­tralised pol­icy guide­lines for devel­op­ment of agri­cul­ture. The em­ploy­ees, work­ing un­der the district ad­min­is­tra­tive set-up, have ceased to be pro­fes­sion­als and be­come a "work force at the dis­posal of the DCOs concerned."

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