ISLAMABAD: Pakistan can restructure the minimum-support prices (MSP) mechanism mainly by prioritizing staple crops, particularly wheat, and enhancing the role of the private sector in the procurement and supply management of other crops.
The State Bank of Pakistan (SBP) in the half-year report titled, “The State of Pakistan’s Economy,” stated the country required the structuring of minimum support price. The report also suggested some important recommendations for improvement of the process.
It further maintained that Pakistan could draw useful lessons from international best practices including implementation of relevant strategies like attractive loan rates for major crops.
Restructuring of Support Prices to Motivate Farmers
The report stated that the new method would possibly serve a dual purpose of providing farmers with financing while reducing their reliance on expensive loans from informal lenders, and at the same time could establish a floor price for these key crops.
The report stated that the revived system grants autonomy to farmers in terms of repaying their loans, either by selling their crops in the open market or by delivering pledged crops to the government procurement agency.
Meanwhile, the government is required to step back from direct procurement gradually and play its role in monitoring demand and supply gaps, it said. The government should also encourage and motivate the private sector to play its role in procurement and the storage process, the report further recommended.
