KARACHI, May 9: Following the announcement on May 3 of a 10 per cent regulatory duty on wheat import, prices in the open market have increased to Rs412 for 40 kg as against Rs350 two weeks ago.
Wheat prices in the open market were down for obvious reasons at the time of harvesting of the crop. With an expected harvest of 2.7 million tons this season, farmers were facing a difficulty in selling their produce because about 800,000 tons of duty free import last season and a carryover stock of about 275,000 tons in the government storage from the previous crop have pushed the sellers to the sidelines.
The farmers were offered Rs330 and Rs350 for 40 kg of wheat. But the prime minister’s strategy to counter the problem of plenty started paying dividends to the farmers as wheat prices have moved up to Rs412 for 40 kg, which is much closer to Rs415 for 40 kg fixed by the government.
As against a procurement target of 700,000 tons, the Sindh government has so far picked up 637,000 tons of wheat from the farmers and officials are confident of meeting the target by next week.
Sindh’s burden of a carryover stock of about 275,000 tons from the previous crop has also been reduced to a great extent. The Balochistan government has agreed to buy 90,000 tons of wheat on a deferred payment of over Rs1 billion and has started picking up the commodity.
In addition, the Sindh government sold 46,000 tons to the United Nation’s World Food Programme for the earthquake hit areas. The government recently agreed to provide 30,000 tons to the army and 20,000 tons to the Utility Stores.
“We are left with only about 100,000 tons of carryover stock and will have about 800,000 tons of stock for the whole season,” a senior official said. Food officials look relaxed and confident of wheat supply and prices for the remaining season.
But traders and millers are disturbed on the feelers being given by the government officials on wheat export possibility. Like a reverse swing of the pendulum, Wheat Commissioner Abdul Qadir Bux Baloch on May 6 announced the possibility of resuming wheat export this season. “We have a surplus of two to 2.5 million tons of wheat which we can offer to the international market.”
Attributed to Prime Minister Shuakat Aziz, the decision to impose a 10 per cent duty on wheat import was announced by Food and Agriculture Minister Sikandar Hayat Bosan at a press conference without elaborating at which forum the issue was discussed. Is it an individual’s decision or it was decided in a forum in which all stakeholders participated? This is a question that begs for an answer.
Johar Qandhari, a leader of Karachi millers, says wheat production is 20 per cent lower as on an average the output is short by eight maunds per acre than last year. Instead of wheat export, he pleads for government’s subsidy on export of value-added bakery products.
Qadir Bux Baloch is a government official but represents the farmers’ lobby. He is perhaps a factor in imposing a 10 per cent regulatory duty on wheat import and now wants the resumption of wheat export so that prices are pushed up further in the market. Mr Qandhari, an urban-based miller, wants “an affordable price” for wheat which should ensure him a “good return” from the market.
The resumption of wheat export at this stage, many millers fear, will not fetch good price because the commodity is being harvested at all places and prices are all time low. Their advice is to wait for a few months so that the size of crop in Pakistan is fully assessed and surplus quantity is identified for export. “Why export wheat and not value-added bakery products that fetch far better prices?” Mr Qandhari asks.
These two represent conflicting interests and each of them is pushing his interest with force and passion without realising the implications it could have on the supply and prices of wheat and wheat flour at the end of this season in December 2006 and January 2007. Is there any forum where all stakeholders and more particularly the urban and rural consumers are represented to discuss wheat policy in all its aspects?
