Agriculture Reference
In-Depth Information
TABLE 4.3
Support and postharvest market prices of wheat, 1984/85 to 2004/05
Intrayear
coefficient
Support price
Market price
Crop year
(Rs per 40 kg)
(US$ per kg)
(Rs per 40 kg)
(US$ per kg)
of variation
1984/85
70
4.62
77
5.08
—
1985/86
80
4.96
82
5.08
—
1986/87
80
4.66
80
4.66
—
1987/88
83
4.72
85
4.83
—
1988/89
85
4.42
93
4.84
—
1989/90
96
4.48
102
4.76
—
1990/91
112
4.99
121
5.40
3.76
1991/92
124
4.99
134
5.39
4.81
1992/93
130
5.01
139
5.35
0.86
1993/94
160
5.30
170
5.64
7.07
1994/95
160
5.19
176
5.70
2.5
1995/96
173
5.15
185
5.51
1.57
1996/97
240
6.15
273
7.00
13.55
1997/98
240
5.56
259
6.00
2.99
1998/99
240
5.13
261
5.57
3.61
1999/2000
300
5.79
297
5.74
3.73
2000/01
300
5.13
275
4.71
4.55
2001/02
300
4.88
292
4.75
5.11
2002/03
300
5.13
305
5.21
3.89
2003/04
350
6.08
384
6.67
—
2004/05
400
6.74
417
7.03
—
NOTES
: Average market price of Multan, Okara, and Hyderabad during postharvest period April-July 2004;
2004/05 market prices are for May-July and also include markets of Faisalabad and Sargodha. — indicates
not available.
tage of growers (Agricultural Prices Commission 2000-01). In 1999/2000,
market prices remained below the corresponding support price, which resulted
in the procurement of 8.55 million tons (about 41 percent of total production).
This purchase exerted a tremendous pressure on the government machinery,
heavily taxing its procurement facilities and market arrangements. But market
prices in the harvest season still averaged somewhat lower than the support
price of Rs 300 per 40 kilograms. Thus, one can very well imagine the price
crash that would have occurred in the absence of such a gigantic operation.
Now consider the situation in the next two years. With large stocks of
wheat still being held by PFDs and PASSCO (carryovers from the 1999/2000
crop) and limited storage facilities, these public-sector agencies could not in-
tervene on a large scale in 2000/01 and 2001/02. Thus, market prices remained
well below the level of support prices. Nevertheless, achieving this price sta-
bility involved large costs, which we discuss below.
