KARACHI, June 10: The US government is keen to supply wheat to Pakistan’s private sector under USDA credit guarantee programme.

USDA Regional Director Michael Henney disclosed this to a number of local flour millers during a presentation he made last week in Karachi.

A former chairman of Pakistan Flour Mills Association Sheikh Akhtar Hussain told Dawn that under the programme American wheat used to be offered to the public sector — to the Ministry of Food and Agriculture to be specific. “But now the US wants to cover the private sector also under the programme.” He said that local flour millers informed the USDA official that the private sector was willing to avail of the facility being offered to them. “But we made it clear that the programme will be successful only if the wheat so supplied is used to increase the export of wheat products.” He said Mr Michael informed the flour millers that the US wheat supplied under this programme would be free of all sorts of impurities.

The flour millers were informed that they would be able to import the US wheat at a nominal marked-based interest rate linked with LIBOR.

The US department of agriculture administers export credit programme for commercial financing of the US agricultural exports.

The USDA Commodity Credit Corporation programmes encourage exports to buyers in countries where credit is necessary to maintain or increase the US sales but where financing may not be available without CCC guarantees.

Under the supplier credit guarantee programme, CCC guarantees a portion of payments due from importers under short-term financing — up to 180 days — that exporters have extended directly to the importers for the purchase of US agricultural products. These direct credits must be secured by promissory notes signed by the importers.

Mr Hussain said flour millers informed the USDA official that at present many flour millers were lying idle or were working below capacity. There are 950 flour mills located across Pakistan and registered with Pakistan Flour Mills Association. They have the capacity to produce 100,000 tons of wheat flour daily against an approximate daily domestic demand of 30,000 tons.

The meeting between the USDA official and flour millers noted that the stock of wheat imported from the US under the said programme would have no impact on domestic production of the commodity.

Mr Hussain said the private sector could avail of the US offer of wheat sale under the USDA credit guarantee programme if the government provided some incentive to the exporters of wheat and wheat products. He said the exporters of wheat products should be given a 20-per cent subsidy so that they could be encouraged to earn foreign exchange.

Pakistan’s wheat output is likely to fall short of the target this year and the country may have to restart import of this commodity.

The Ministry of Food and Agriculture estimates 19.25 million tons of wheat crop this year, up from 18.23 million tons last year, but short of the target of 19.75 million tons. Some flour millers estimate a much lower production of wheat.