February 17, 2007	Saturday	Muharram 28, 1428

KARACHI, Feb 16: Private sector is expected to export around 0.1 million tons of wheat by end of next month as first ship load of around 15,000 tons is expected to leave for Dubai from Karachi port on Monday.

Since exporters did not succeed in their bids against sale offer of 50,000 tons by the Sindh Food Department the entire load has been purchased from the open market.

It is expected that private sector exports of wheat would reach up to 50,000 to 60,000 tons by end of this month because five leading exporters have entered the wheat trade - Gharibsons, Conwil, Global, National Flour and DD Shipbreaker.

Most of the shipments are going to Gulf States, Singapore, Vietnam, Malaysia, Indonesia and Rangoon.

Though the government plans to export around two million tons of exportable surplus wheat from the current season’s production, but initially it has allowed Sindh government to export around 50,000 tons from its stocks, Punjab 150,000 tons, PASSCO 300,000 tons and around 50,000 tons from the open market.

Private sector exporters claim that the first shipment of wheat has been purchased by them from the open market as their bids were turned down by the Sindh Food Department of being below the minimum price.

However, some official circles believe that much of these stocks have been lifted by exporters from flour mills who get wheat supplies from the food department on subsidised rates to keep wheat flour (atta) prices low for a common man.

There are two different views on permission to private sector exporters to lift stocks from open market. Sindh government denies of any such permission whereas exporters say that the federal government has allowed them to lift up to 50,000 tons of wheat from the open market.

What is being widely questioned is that if there was no permission to purchase wheat from the open market then from where the exporters have managed to get this quantity to export? That would mean that official claims about getting these stocks from flour mills is right and in a way this means that export trade of wheat is also being subsidised at the cost of domestic consumer.

According to Sindh Food Department sources presently the government is supplying wheat to flour mills at Rs11,260 per ton whereas their actual cost after adding incidentals (storage, fumigation and transportation) comes at around Rs11,975 per ton which means a difference of more than Rs715 between the open market rate and subsidised rate.

However, the official sources also claim that the federal government has only allowed export of 0.5 million tons and not 0.55 million tons as being claimed by private sector. The Sindh Food Department has afresh called export sales of 50,000 tons for which public notice is appearing on Saturday (February 17). However, this time the department has reduced the minimum quantity from 25,000 tons to 5000 tons and hope good response will come, the sources disclosed.

In the last offer, the sources said that highest bid offer was at Rs11,425 per ton which was much below the actual cost incurred by the government between Rs11,600 to Rs11,700 per ton.

The exporters are claiming that they have also purchased wheat from Punjab through their bid offer for sale of 125,000 tons. However, it is obvious from the bids accepted by the Punjab Food Department that heavy subsidy was being given to exporters because the highest bid was quoted between Rs11,500 to Rs11,700 per ton whereas the actual cost comes at around Rs11,975 per ton which includes procurement rate of Rs10,375 per ton plus Rs1,600 incidental costs. It would mean that Punjab government has subsidised export trade to the tune of Rs375 per ton.

The federal government has allocated Rs3 billion towards food subsidy and if exports of food items are also going to be subsidised through these funds it would be at the cost of domestic consumer who are already hard pressed with every rising food inflation and high cost of living.