April 08, 2007	Sunday	Rabi-ul-Awwal 19, 2007

KARACHI, April 7: Pakistan can become a new market leader in wheat flour exports on harvesting bumper wheat of around 22.5 million tons as per government estimates. After meeting the domestic demand of around 19 million tons, the country would still have a surplus of more than 3.5 million tons.

However, all this depends upon the government how it tailors its wheat export policy, or would it continue with the traditional way of disposing of surplus stocks in bulk which would not earn much foreign exchange or create consistency in export market of value-added wheat products.

Despite the fact that there is going to be lesser demand by five per cent of wheat flour during 2006-07 in the world market as forecast by the International Grains council (IGC), but still Pakistan could have its share provided the government encourages export of value-added wheat products, particularly wheat flour which has a world market of over 9.25 million tons.

Besides the bumper wheat crop of around 22.5 million tons, there is a sizable quantity of carry-over stocks from last year which would mean that the country will have to take full benefit from its surplus wheat stocks, particularly when there is a big demand of wheat flour even from neighbouring countries, like India and Australia, who are witnessing a short crop.

The IGC forecasts 2006-07 world flour trade at 9.25 million tons, wheat equivalent, down 5.4 per cent from the 2005-06 estimates of 9.78 million. The 2006-07 forecast also is down from the 9.724m tons shipped in 2004-05, but is higher than the recent low of 8.583 million in 2001-02.

Drop in Iraq’s wheat flour imports in 2006-07 are forecast at one million tons, compared with 1.5 million estimated in 2005-06. At one million tons, Iraq would be the world’s second-largest importer, falling from the top spot in the 2005-06 season, and Libya would regain the number one position it held in recent years. Libyan imports in 2006-07 are forecast at 1.15 million tons, the same as in 2005-06, as demand should remain strong, the IGC said.

Wheat exporters told Dawn that a lot of enquiries are daily dropping in their offices from these countries, including Indonesia, Malaysia and Sri Lanka, and world traders are presently focusing on Pakistan for meeting wheat and wheat flour demand in the world market.

Turkey, which became world leader in wheat flour exports in 2005-06 on exporting around 2.245 million tons, is being forecast by IGC to reel back to second position after European Union as its exports would drop to 1.9 million in 2006-07.

The EU is expected to recapture its position as the world’s largest exporter on exporting around two million tons of wheat flour in 2006-07.

Presently wheat flour exports from Pakistan are being quoted at $255 to $265 (fob) per ton and if the country even manages to export a modest quantity of 0.5 million tons, it would earn a huge foreign exchange of around $130 million. However, if the country manages to export around two million tons, it would earn around $520 million.

According to wheat flour exporters, the cost of processing wheat flour of export quality comes at Rs14,500 per tons and if Rs1,500 are added towards the incidental cost, the total estimated cost of wheat flour for export will come to Rs16,000 per ton or $253 per ton. There is a demand of grade one wheat flour (maida) in the world market which is a little higher in cost compared with plain wheat flour (atta) used in the country.

Though the government has fixed wheat procurement prices at Rs11,260 per ton, with the start of new crop harvesting in Sindh from late last month, prices in the open market came down to Rs11,150 to Rs11,200 per tons for Karachi delivery.

Market analysts feel that with the start of harvesting in Punjab in the middle of this month, wheat prices would further come down to Rs11,050 in the open market.

However, trade circles have appreciated the State Bank of Pakistan’s decision to extend bank finances for wheat procurement up to Jan 31, 2008. This will help growers to get better prices as this will encourage higher involvement of private sector in wheat trade.

Similarly, the government has extended wheat export deadline from April to June 30, but exporters have demanded that there should be no deadline for wheat flour exports.

A leading wheat flour exporter, Johar Ali Kandhari, told Dawn that if the government comes out with a policy of encouraging export of value-added wheat products, it will enable the country to capture large export market, particularly of wheat flour, at a time when there is a short crop of wheat in many countries, including India and Australia, who had been net exporters of wheat and wheat flour.

He asked the government to give freight subsidy or support of $10 per ton on wheat flour exports and also ensure availability of wheat throughout the year for producing flour for exports. Once we managed to send message in the world market that Pakistan could be a reliable and permanent source of wheat flour, it will enable us to capture big chunk of world wheat flour market, he added.

Mr Kandhari also asked the Trade Development Authority of Pakistan (TDAP) to sponsor wheat flour delegations foreign visits and provide other assistance for promotion of export of wheat flour because the country can do better by exporting value-added products, such as Samolina (Sujee), wheat bran (chokker) and vermicelli (Pasta).