04 July 2004	Sunday	15 Jamadi-ul-Awwal 1425

KARACHI, July 3: The government will have to allocate Rs45-50 billion for import of about two million tons of wheat this year as all the initial projections of local crop estimates have proved wrong and big businesses are manipulating the market to make big gains at the cost of consumers.

Anticipating the oncoming wheat shortages and the havoc wreaked by the cartels and manipulators in the wheat market since October 2003, the State Bank of Pakistan in its recent third quarterly report for 2003-04 has proposed import of two million tons of wheat.

The State Bank now wants government's proactive role in the market and is of the view that the import of two million tons of wheat and a prudent storage and marketing will protect the interest of low income group who are hard hit by the food inflation. In its previous second quarterly report for 2003-04, the State Bank had called for anti-trust and anti-cartel legislation and suitable administrative steps to render profiteers, hoarders and speculators ineffective in the market.

Flour price in Karachi and most parts of the country is now ranging between Rs14 and Rs16 per kg when wheat harvesting has just ended; temperature is high and consumption is relatively less. Punjab is the only province where consumers get flour at Rs12 a kg.

The wheat crop estimate for this year was initially projected at 20 million tons and was based on the primitive sampling calculations done by the patwaris. In Sindh, the initial estimate for wheat crop was 2.1 million tons and now it is being estimated at around 1.5 to 1.6 million tons.

In Punjab, where almost 85 per cent of country's wheat is grown, the procurement by the provincial government and Passco has become a problem even after putting all restrictions on wheat movement. Market analysts expect a harvest of 14 to 15 million tons in Punjab.

Obviously, the government's decision to increase procurement price to Rs340 for 40 kg has failed to lure farmers in Sindh and Punjab who prefer to sell their grain to the local brokers and traders at Rs380-390 for 40 kg.

Another reason for shortfall in wheat crop in Sindh is the delay in sowing because of the tussle between sugar millers and sugarcane growers.

With a population of 15 million and located at a distance from the wheat growing areas, Karachi was the first city to feel the pinch of flour price spiral in October last year before Ramazan set in. Since then, the flour price in Karachi ranged between Rs15 and Rs16 a kg after hitting Rs20 in February and March this year.

The wheat crisis still lingers on even after the completion of harvesting. The only decision taken by the government is to go for import of half a million tons of wheat for which tenders are expected to be floated on Monday.

Market analysts believe that half a million tons of wheat import will be insufficient and another half a million tons will be imported later. But wheat prices in the international market will start moving up after October and will hit peak sometimes in December and January when wheat supply in Pakistan is least and demand is highest.

The most unfortunate aspect of wheat crisis is that the graduate legislators (members of the national and provincial assemblies and the Senate) have not taken any notice of the plight of low-income consumers. Farmers dominate the legislators but they have not demanded even a one-day debate on the wheat crisis in the country. It did not figure in the much-trumpeted peasants conference held in the Presidency where an attractive package was announced for the farmers. Federal and provincial food ministers have not bothered to examine the causes and find out solutions of this crisis.

Market analysts suggest that the government should calculate the actual import requirement and make quick arrangements before the prices start going up in the international market. Simultaneously, the government should start making preparations for the next crop. Depending on timely rains and announcement of a fair price for farmers - may be Rs400 for 40 kg - there is no reason why Pakistan should not produce 21-22 million tons of wheat next year.

Official circles show no concern on flour being sold at Rs12 and Rs14 a kg in the market. If it is so then the farmers should be compensated rather than the traders and the brokers who thrive on cheap bank credit.

"If the government can provide Rs25 to Rs50 billion for the wheat import why can't it give a much smaller amount to the farmers and gets better crop."

And finally why India is excluded from the list of wheat importing countries. Pakistan and India produce brown and hard grain. To ensure fungus-free wheat, a pre-shipment inspection can be arranged for every consignment in the presence of representatives of Pakistani business company. It will ensure quick delivery, less freight and may be less cost than the US and Canadian wheat. It will also break the cartel of wheat and shipping agents at Washington that has been operating for almost last two decades.