While according to the sources; the government is in the favour of fixing the minimum guarantee price of wheat instead of the support price just to attract the farmers to sow wheat.
"It is true that the price of wheat in the international market is 307 dollars per tonne, while the during the same period last year, the price was 340 dollars per tonne. But we should not forget that December last, the price of the commodity was 435 dollars per tonne. So, keeping this thing in view, the Food Ministry has decided to fix the price at around Rs 800 per 40 kilograms or even more", said the sources.
They added: "If the government fix the price of wheat at par with the international market, it would indeed help check smuggling and hoarding in the country." Sources said that the government might defer the announcement of the minimum guarantee price of wheat for at least 2008-09 to avoid food inflation.
The government had announced to import 2.5 million tons at the rate of about Rs 1, 100 per 40 kilograms and would distribute to the flourmills at lower rates. Sources said that the neighbouring countries were also facing the problem of low production of wheat as compared to their consumption. India is producing 72.5 million tons, while its consumption exceeds 80 million tons, thus facing a shortage of 7.5 million tons. Similarly, Iran is producing 5.5 million tons, while its consumption is 11 million tons, a shortfall of 5.5 million tons.
Sources said that the country might miss the production target of wheat this fiscal because the previous government failed to fix any support price, which discouraged the growers. Resultantly, the wheat sowing area was reduced by two percent, resulting in poor yield of the crop. So, the country faced with the threat of steep decline in wheat sowing area this year, the ministry requested Prime Minister Yousuf Raza Gilani to fix a minimum of Rs 1, 000 per 40 kilograms as minimum guaranteed price of wheat, said the sources.
Sources said that the balanced use of fertilisers at the time of crop cultivation is an essential tool to increase productivity. "That is why, the government has decided to provide Rs 2,200 subsidy on one bag of DAP. It has been decided that the price of 50-kilogram DAP bag will not be more than Rs 3,150 in the domestic market, in spite of the fact that in the international market, the price of the commodity has touched 1,200 dollars per ton", said the sources.