November 20, 2003	Thursday	Ramazan 24, 1424

KARACHI, Nov 19: The Sindh government desperately needs at least 100,000 tons of wheat to meet its deficit in the coming weeks. However, it plans to start releasing 69,000 tons from its stocks which it auctioned at virtually throwaway price in the first week of August.

This auction is said to be the biggest in a single lot in the province. It was concluded at a net loss of Rs350 million for the province. The successful bidder is from the home district of the Sindh chief minister. The chief minister gave approval to this transaction about two weeks ago — some three months after the auction. The provincial government has constituted a monitoring committee headed by the provincial food and agricultural minister.

The estimated Rs350 million loss for the Sindh government is the difference between the price on which 69,000 tons of wheat was sold to the successful bidder and the purchase price of wheat plus financial cost and storage charges of the last three years.

The released wheat from the government stocks will cost the successful bidder of the auction Rs6.37 a kg. The Sindh government’s own issue price is Rs8.25 a kg and the market price is now being quoted at Rs10.50 to Rs11 per kg.

As against a loss of Rs350 million for the Sindh government in this transaction, the beneficiaries are a few individuals, including the trader from the home district of the chief minister and one of the top dogs of the province, who are expected to make a cool Rs150 to Rs200 million.

The Sindh government auctioned 69,000 tons of wheat from the 1999-2000 crop as it was found to be unfit for human consumption. It was sold out initially at Rs5,170 a ton, but was re-negotiated to Rs6,370 a ton. The official price is Rs8,270 a ton and the expected loss was brought down from Rs750 million to about Rs350 million in the deal.

It took almost three months for the Sindh chief minister to approve the deal during which the provincial government continued to provide wheat from its stocks, including from the 1999-2000 crop, to the flour mills.

Market watchers say the 69,000 tons of stock from the 1999-2000 crop has been reduced to hardly 30,000 tons and the deficit quantity would be met from the 2000-01, 2001-02 and 2002-03 crops.

A mix of four crops in the market can now fetch up to Rs10.50 to Rs11 a kg. “After all the flour mills in the province were getting a mix bag of these four wheat crops,” an official said.

The federal government on Wednesday fixed new support price for wheat at Rs350 a maund. This new price would justify traders demanding Rs10.50 and Rs11 on a kg in the open market during winter months when demand rises. Wheat supplies also get diminish because of the fag end of wheat year.

Anticipating a deficit, the Sindh government had placed a demand of 300,000 tons of wheat from the Passco stocks. The federal government reduced the demand to 30,000 tons. Islamabad is also receiving wheat demand from NWFP and Balochistan.

The crop estimate of 2002-03 still remains a mystery as it ranges 19.2 million tons to 19.5 million tons. Since the banks provided credits at relatively low rates, the millers and traders took advantage and obtained huge quantity of wheat from the fields. Quite a sizable quantity was stocked in the ginneries.

“Banks provided about Rs6 to 7 billion loans to the commodity operators who include big sharks of the market,” a Sindh government official confided, who is puzzled why wheat in the open market is being sold at Rs10.50-11 a kg when wheat flour is being priced at Rs10 a kg.

The official puts total wheat stock position at a little over three million tons in the country. Out of this, Punjab’s stocks are about 2.3 million tons and Passco has 450,000 tons. Sindh, NWFP, Balochistan and Azad Jammu Kashmir have placed their demands on these stocks.

Expecting a deficit in wheat, the Pakistan Flour Mills Association too advised the government to go for import of half a million to one million tons of wheat. Bilal Sufi, a leader of the association, informed Dawn over telephone from Lahore on Wednesday that the decision of wheat import was expected to be taken in next meeting of the Economic Coordination Committee of the cabinet.

Market analysts say that Pakistan is going for wheat import at a time when the world’s grain stocks are down to the lowest level in the last 30 years. “For the first time, the grain harvest has fallen short of consumption four years in a row,” an international business house said. “If 2004 brings another large shortfall comparable to this year or the last year, there could be chaos in world grain markets by September 2004 as more than 100 grain importing countries scramble for scarce exportable supplies,” the report predicts.

Pakistan’s next wheat crop estimate is also doubtful as the sugar millers delayed operations, forcing sugarcane growers to keep their crop in the fields. At least 12 to 15 per cent of wheat in Sindh and Punjab is sown on the fields vacated by sugarcane.

Distress wheat import in coming days will bring fortune for the big sharks and “seths” of the commodity market but is bound to add to the miseries for more than 100 million people of the country who live below poverty line or merely on subsistence level.