KARACHI, April 13: The Asian Development Bank (ADB) wants the closure of all the provincial food departments and procurement and sales of strategic wheat reserve entirely on market rates by the PASSCO, a federal government agency.
It means that PASSCO will float tenders to invite bids from the traders at the time of harvesting to build up the strategic wheat reserves at the lowest possible price and on the best possible terms. The official support price has to be a merely reference price.
During the lean period, normally in winters just before harvesting, the ADB wants the disposal of wheat from the strategic reserves through open bids so that government gets the highest possible price.
The ADB proposal is to be discussed next Monday at a meeting of all the bureaucrats of the federal and provincial food establishments at Islamabad. Under a wide ranging agricultural reform programme, the ADB offered $250 million loan about three years ago of which the wheat procurement and disbursement constitutes a small part.
The provincial governments were expected to close down all their food departments by June 2002 and the federal government was expected to take up the responsibility of food security.
The regulatory functions of the provincial food departments were expected to be taken over by the PASSCO to ensure fair return to the growers and also stable prices for the flour consumers.
The government is going ahead with building up total reserve of 5.5 million tons strategic wheat at a total cost of more than Rs65 billion in the current season. But the ADB wanted the government to procure only two million tons by way of tendering, had its schedule been observed by the government.
The Monday meeting is expected to discuss the ADB proposal of further deregulation and liberalisation of wheat trade that provide millers and traders a bigger role in wheat economy of over Rs250 billion.
"Will the ADB proposal bring any good news for the farmer or the consumer," a market analyst was asked. He was convinced that neither the farmer will get a fair return nor the consumer will get flour at the competitive rates in the market if wheat was procured and sold on bids. "There is open competition in Pakistan market but cartels control the trade," is the judgement.
In Pakistan market is neither competitive nor transparent. There are big sharks, the known 'seths' who have been manipulating and controlling Pakistan's food market for years. They did this in close nexus with the officials and will continue to do so with new partners in the game after officials are marginalised.
But the bureaucrats are not happy on their wings being clipped in this game, that involves as much as at one time more than Rs20 billion subsidy in a year. For years together, before 1999, the country imported wheat.
Decisions to purchase wheat from the US, Australia and other countries were taken entirely by the bureaucrats. Also to benefit were the agents of shipping companies. A nephew of late military dictator General Ziaul Haq as an agent of a shipping company in the US made big money during the decade of eighties.
For these reasons, the bureaucrats have been putting one hurdle after the other in implementation of the ADB proposal. But then the ADB proposal has built in contradictions. "If the provincial food departments are corrupt then PASSCO is not an organisation of angels," an official said.
A report on Food Security Plan in 1997 during Nawaz Sharif government indicts PASSCO for mismanagement and there was a proposal to wind up PASSCO. PASSCO got a new lease of life after 1999 military take over.
Things have not changed after 1999 when the country has attained wheat autarky in the year 2000. The government fixes official prices of wheat and make programme for procurement. Farmers are never paid the official price.
A procurement centre caters to farmers in 30 to 40 miles radius area. There are hardly any roads and transport. For a small farmer of 16 to 25 acres, it is just impossible to carry his wheat to the procurement centre.
The powerful wheat broker working in close nexus with the big wadera of the area and full patronage of district bureaucracy literally snatches wheat from farmer at hardly 50pc of the officially fixed price. He makes money on 50 per cent margin.
Wheat watchers say that even now when market prices are higher than the officially fixed prices, the farmers get hardly 60 per cent of the government price. Low interest rates of banks and easy terms has facilitated the wheat broker moves around with tons of money and offer hard cash to the farmers at throw away price. This is a fact acknowledged by the State Bank report issued recently.
But for a change, the circumstances have brought corrupt bureaucrats in open confrontation with the unscrupulous traders and brokers. There is no political party or even an NGO that could educate people on this new emerging contradictions in the ruling elite.
