June 02, 2007	Saturday	Jamadi-ul-Awwal 16, 1428

LAHORE, June 1: Wheat trade stakeholders on Thursday expressed their reservations about official optimism on crop size this year, describing the prime minister’s insistence on 23.5 million tons as wrong and misleading.

Speaking to Dawn, they said simple statistics and market situation belied the official claim of having such a huge crop. Had it been so as claimed by Prime Minister Shaukat Aziz, the wheat price would have crashed. In fact, wheat price in the market had been rising ever since harvesting began, they said.

They said traditionally 30 per cent of the total crop came to the market as marketable surplus. If the crop size (23.5 million tons) was true, they said, at least 7.8 million tons should have come to the market for trading.

Out of this quantity, the Punjab food department had been struggling to procure anything beyond 2.5 million tons. The Pakistan Agriculture Storage and Services Corporation (Passco) was nearing its target of 1.3 million tons and Sindh had bought only 550,000 tons of wheat. It all made only 4.35 million tons, still leaving 3.45 million tons of wheat missing, they claimed.

According to them, official statistics show export of just over 400,000 tons which included crop from the last season as well. Even if the entire quantity was taken out of the current crop, it still left a question mark over the availability of three million tons of wheat, they said.

“The millers, who procure around one million ton, have not purchased wheat this season because of high interest rates,” said Chaudhry Salahuddin of the Pakistan Flour Mills Association. With the current interest rate of around 16 per cent, every bag would cost some Rs12 a month on interest head alone. Storage and fumigation charges would be in addition to those charges. The average wheat price in the open market remained well over Rs425 for 40kg. A four-month storage could have taken wheat price well over Rs445 for 40kg — a price at which the government released wheat. Thus, it did not make economic sense for the millers to procure wheat, he said.

During the season, they hardly procured wheat but for daily grinding, he said and added: “Some millers have stored some wheat, but it should not be more 25 per cent of their normal purchases.”

If the millers had procured some 250,000 tons of wheat, it still left 2.75 million ton missing.

Ministry of Food, Agriculture and Livestock Additional Secretary Raja Shahid said the government’s claim that exporters, hoarders and millers had made these purchases was based on second survey of wheat carried out during the peak harvesting time. The first official survey had put the crop figure at 22.7 million tons and that was carried out in a limited area — Sindh and Bahawalpur (Punjab) — and did not present correct picture. But the second survey was taken during harvesting and was normally close to reality. The prime minister’s claim was based on that survey, he insisted.

Not only traders, exporters and hoarders, but the farmers also had stored wheat this year because they received very good price of rice and had good money on them.

“All the provincial governments carry out this survey and the federal government only consolidates the figures. So the crop size claim is true and so are calculations made for marketable surplus. But missing wheat is lying with exporters, hoarders, farmers and millers. With suspension of export, the official procurement figures have started improving and the trend will continue. The government is determined to take its stocks to five million tons and it hopes to succeed soon.”

Ibrahim Mughal of AgriForum alleged that the government was trying to hide the weaknesses, but the fact remained that the crop size was not as big as was being claimed.

“There seems to be an overestimation of at least one million ton if not more. Had it been 23.5 million tons, the price could have crashed but it had not been the case. Wheat price remained up and kept increasing ever since fresh crop hit the market.”

Another indicator was flour price which increased right in the middle of procurement and harvesting season. There might be some additional buying by exporters or storage by big farmers, but 2.7 million tons were too much to go missing between these two players, he said.