WHEAT IMPORTERS SITTING WITH THEIR FINGERS CROSSED
Coordination Committee of the Cabinet is likely to meet shortly to decide its wheat import plan
By AMANULLAH BASHAR
August 02 - 08, 1999
The Wheat Coordination Committee of the Cabinet is likely to meet shortly to decide its wheat import plan which is likely to be in the region of 3-3.5 million tonnes for the current financial year, said an active players in the commodity market.
The Federal Government has so far come with its plans to import 100,000 tonnes of wheat worth $13 million from the United States on credit under PL-480 programme as a part of its wheat import policy.
The agreement for import of wheat from US was signed on July 27, 1999 in Islamabad and the shipment is likely to call on Port Qasim sometimes in coming September. The sale proceeds of imported wheat will be used by the government to support on-going reforms in agriculture sector to enhance food security and to encourage broad based equitable and sustainable development.
Originally the US loan under PL-480 was meant for the import of 35,000 tonnes of soyabean seed for local solvent industry. However, the government decided to import wheat instead of soyabean seed following reports of shorter than targeted wheat crop.
According to official figures, the size of the wheat crop has so far been estimated at 18.2 million tonnes which is likely to touch the figures of 18.5 million tonnes as reports from certain areas in the province of Punjab where harvesting was still going on, has yet to arrive. A comprehensive plan for import of wheat may be chalked out by the government in the light of the exact assessment of the crop. Roughly speaking the total wheat consumption in Pakistan is estimated at around 21-22 million tonnes a year. If the wheat production figure of 18.5 million tonnes is taken as into consideration, Pakistan will be required to import around 3.5 million tonnes of wheat this year. The government had imported around 2.2 million tonnes of wheat last year while the private sector imported 1.1 million tonnes. About three million tonnes of wheat worth $373 million was imported in 1998-99.
In order to make Pakistan sufficient in wheat production, the market players as well as millers are of the view that the official support price of wheat should be announced between Rs300-320 per maund as early as possible to induce the farmers to plan for a better crop.
currently, the official support price of wheat is Rs240 per maund and issue price for the flour mills is Rs750 for a 100 kg bag of flour.
Current price of locally produced and imported Turkish and Australian wheat is ranging between Rs750 to Rs780 per 100 kg. Flour prices now range between Rs.8.per kg to Rs11 at retail stage.
The price of 40kg bag of flour at wholesale stage is, however, varying at different centres of the country. It was selling at Rs293.60 at Lahore, Rs349.60 at Peshawar, Rs456.40 at Quetta and Rs299 at Rawalpindi. Its is said that increasing prices of flour in Peshawar and Quetta centres is because of inadequate supply of wheat.
Active players in commodity market are sitting with their fingers crossed about government's programme to import of wheat for the current financial year. A stock of 5 million tonnes of wheat, however, has been procured out of the current season by the government's wheat procurement system.
Apart from composed posture of the official quarters over wheat situation, market sources anticipating a gradual price hike of wheat if the import schedule was not announced immediately.
Despite a clear cut note of warning, sounded by the provincial government of Sindh, the wheat dealers taking advantage of the situation law and eruption of violence in some parts of Karachi have started selling flour at Rs 11 per kg in violation of the fixed price of Rs 8.25 per kg. The retailers, however, attributing the increase to what they called short supply of wheat. Official sources, have claimed that wheat is abundantly available and supplies to wheat millers have already been ensured to their satisfaction.
According to an official version, over 700 flour mills are operating in the country which were more than the actual need of the country. However, the entire produce of these mills consumed because a sizable amount of flour is smuggled out of the country into neighbouring Iran and Afghanistan.
According to reports, the wheat crop in Iran and some Central Asian States was reportedly bad this year which means that there were greater possibility of increased smuggling of wheat to these countries this year. Under these circumstances it would not be wise to put any restrictions on new flour mills in Pakistan. Instead of placing restriction on setting up new flour mills, their products should be utilized more productively by exporting wheat or flour through official channels by taking strong anti-smuggling measures.
The Economic Coordination Committee (ECC) of the Cabinet, has asked the State Bank of Pakistan to issue directives to all commercial banks not to provide financial assistance for new flour mills in future.