March 31, 2006	Friday	Rabi-ul-Awwal 1, 1427

LAHORE, March 30: The federal government is actively considering imposing duty on import of wheat in order to bring price parity between the imported and locally produced stuff.

According to sources in Minfal (Ministry of Food, Agriculture and Livestock), the Punjab government is pressing hard for the import duty in order to bring international and domestic prices of wheat at par. At present, imported wheat is costing exporters Rs380 per 40kg at the Karachi Port, whereas, the Punjab Food department has been releasing the same quantity at Rs440. This differential of Rs60 per 40kg has encouraged massive imports, creating a glut in the local market.

The Punjab has based its case on two factors namely, protecting the farmers’ interests and avoiding a huge financial burden.

If the duty free wheat import is allowed to continue, it will damage the farmers beyond redemption. They can not produce crop below a certain level because of costly inputs. If cheap wheat continues pouring in from abroad, the farmers’ produce would be rendered uncompetitive and it would have an adverse impact on the economy, the Punjab government sources argued.

The provincial government also maintained that in case of continued import, the Food department would be carrying a stock of over two million tons next season leaving hardly any space to store the wheat procured from the farmers.

Though the federal government has removed export duty on wheat and flour, but it has not helped in eliminating glut in the local market. In these circumstances, the Punjab Food department is left with no option but to plead for slapping of import duty, at least to the extent of price differential that bedevils the local market.

The Farmers Associates Pakistan (FAP)) sources opined that the federal government should had imposed duty on import of wheat last December when it was realized that it would be able to exhaust its stocks if the duty free import is allowed to continue.

“Granted that the government could not stop the import process midway when importers had already placed orders, It should have at least set a deadline for free import of wheat and its quantity. It did neither and the duty free import is still allowed when fresh crop is about to hit the market, FAP sources added. “Should the duty is imposed, it would certainly help stabilise domestic market,” says Sabahat Khan, a wheat trader from Lahore.