Policy Reforms & Analysis of Wheat Procurement System in Punjab, Pakistan

The current policy of minimum price prevailing in the country should be abandoned as although this policy encourages the farmers to produce greater amounts of wheat but it is unfavorable for the government. Instead of minimum price policy, input costs need to be reduced to compete in the international markets as higher domestic prices leave a country internationally uncompetitive and increase the costs to the economy. The objective of this study was to find suitable price policy reforms. Extensive analysis revealed that higher cost of production is the main reason for higher domestic prices. Therefore, the study proposes that controlling and reducing input costs will benefit the farmers as well as the economy. Subsidies on inputs, especially fertilizers, should be given by the government as this will reduce the cost of production significantly. Moreover, reduced input cost for wheat will be the appropriate policy intervention which will lead to achieve international competitiveness. Thus, the policy recommendation on the basis of the analysis carried out in the previous sections is that subsidy should be given on inputs of wheat, especially fertilizers, to reduce the cost of production, as reduction in the production cost will proportionately reduce the support price.