Pakistan raises wheat support price for farmers

By Augustine Anthony

ISLAMABAD (Reuters) - Pakistan is raising the price it pays to farmers for wheat by nearly 23 percent, Prime Minister Yousaf Raza Gilani said on Saturday, after failing to tempt producers to sell the grain for strategic stocks.

The government plans to build a 5-million-tonne strategic reserve from the 2007/08 crop, but farmers had rejected the procurement price of 510 rupees ($7.9) per 40 kg as below domestic and international market levels.

"The wheat support price is being increased from 510 rupees to 625 rupees ($9.9)," Gilani told parliament in a speech in which he set out his government's priorities for its first 100 days in office.

Gilani's government, being set up after opposition parties won a Feb. 18 general election, has inherited a range of economic problems including widening trade and fiscal deficits, rising prices and food and power shortages.

Gilani said his government would ensure smooth supplies of wheat, adding that a crop insurance scheme for farmers would be introduced.

An official of the Food and Agriculture Ministry recently said it had proposed that the government increase the support price to at least 600 rupees.

Industry officials said a support price of 600 rupees would push up flour prices by up to 40 percent.

The increase in the support price came after food officials told the government they had failed to persuade farmers to sell wheat for strategic stocks in Sindh province, where fresh wheat arrivals from the new crop have begun.