KARACHI, Oct 9: Is Pakistan heading towards a wheat emergency worse than 1997 wheat crisis? The issue is expected to crystallise sometime in November and December.
In that case, the wheat crisis will coincide with the election campaign for National and Provincial assemblies.
This question is being asked after the Trading Corporation of Pakistan (TCP) received on Monday a very poor response to its wheat import tender for 0.1 million tons.
Media reports reveal only two bids were offered that gave prices between 450 dollars a ton to 500 dollars plus a ton of wheat from Canada and Russia.
Repeated calls were made to the TCP chairman on Monday and on Tuesday, but there was no response.
Efforts were made to contact federal food minister Hayat Mohammad Bosan, Sindh food advisor Ghulam Murtaza Jatoi at his village, the federal food secretary, the Sindh food secretary, the federal commerce minister and the federal commerce secretary to share with them the information that prices of wheat in open market in Karachi have crawled up to Rs1,540 for a 100 kg bag on Tuesday and to find out the government’s wheat import plan and the strategy to face this situation.
This deafening silence in Islamabad and Karachi on such a sensitive issue raised many questions which were discussed with market analysts, traders and businessmen.
“President Pervez Musharraf will have to bear the brunt of wheat crisis in the coming weeks as the present political setup in Islamabad and in provinces is about to be packed up and replaced by caretaker governments,’’ a market analyst tried to explain the indifferent attitude of the federal and provincial ministers.
President Musharraf now waits for a Supreme Court verdict next week on his eligibility of candidacy. He unofficially won this election on Oct 6. If everything goes as planed, the president will relieve all governments in Islamabad and in provinces by mid-November and install caretaker setups to organise elections sometimes late in December or early January 2008.
In case, the president gets a verdict from Supreme Court in his favour sometimes next week, he will have to tackle a wheat crisis created by his political allies in the government.
In 1997 wheat crisis, there were hunger marches and incidents of burning down and looting of flour mills and wheat stocks in Northern areas. There were incidents of firing and a few casualties. In big cities, like Karachi, there were protests as wheat flour prices touched Rs23 to Rs25 a kg.
The Pakistan Flour Mills Association, Sindh Chapter, is planning to send an SOS on Wednesday to president asking him to arrange immediate import of wheat no matter at what price.
“Bread is indispensable,” argued a miller who said “every healthy person needs food after six hours,” and this makes him vulnerable to hoarders, profiteers and speculators who are out to fully exploit the situation and make a quick buck.A leader of the millers accused politicians of abandoning the president in a situation which is created by them.
“Who does not know the names of those hoarders who still maintain stocks of wheat and are still supplying this grain to Afghanistan and beyond,’’ the leader said.
The Sindh government too has written a tough note to Islamabad pleading a quick and firm wheat import plan to avert a major crisis in the coming days.
Businessmen say Pakistan is exploring wheat import in a situation when wheat stocks are said to be the lowest in the last 25 years and hence the unprecedented price rise — 450 to 500 dollars a ton.
Oil prices are also on the higher side and Pakistan’s wheat import programme will be hard squeezed under the impact of a double-edge sword.
The landed cost of imported wheat will be in no way less than Rs30 to Rs35 a kg.
The TCP opened its tender for 100,000 tons of wheat import on Monday to find a very poor response. Only two bidders offered supply with a price that is prohibitive and would cost millers Rs30 a kg on which consumers will have to pay about Rs32 to Rs35 a kg on wheat flour.
Repeated calls made to TCP chairman Abdul Malik on Monday and Tuesday failed to evoke any response and there was no other official to offer any explanation.
Nonetheless, the Sindh government still wants Islamabad to finalise a quick wheat import programme to offset the omcoming wheat crisis which the market analysts fear “will be worse than 1997.’’
The Sindh government was unable to procure target quantity of 0.7 million tons of wheat in spring harvest because the federal government allowed wheat export.
This permission gave a free hand to speculators, traders and hoarders who purchased wheat directly from farmers and the Sindh government could procure hardly 575,000.
The Sindh government now fears a wheat crisis in 20 million population of Karachi in the coming weeks and wants Islamabad to augment its stocks from import no matter at what cost.
The government is now caught up in a situation that can best be identified as being caught between the deep sea and devil. Either, the government goes for import of one million tons of wheat from Russia, Canada or some South American country at a high price, pay a high freight and then arrange for its local distribution, the total import bill of wheat would be in no way less than 450 million dollars. After adding the freight bill and then local charges, the consumers may be asked to pay Rs35 for a kg of flour or the government would have to pay subsidy which would push up its expenditure budget and enlarge budget deficit.
“Either the consumers may be asked to pay a much higher cost for wheat flour or government provides a big amount of subsidy,’’ the analyst said, who is convinced that the government would come under pressure either way.
“Musharraf faces this situation because a few of his hard core supporters in the Punjab manipulated government policies to hoard wheat and make quick money,’’ the market analyst said. He said “names are now being mentioned because policies were made, twisted, and adjusted so blatantly from January till this day to suit the needs of this particular business-political group that market is abuzz with their names.’’
There are questions which perhaps the caretaker setups in coming days will explore to seek answers. Why was wheat export allowed before the building up of strategic and operational reserves of at least six million tons?
Why did the Punjab government delay release of wheat — till the second week of September -- from its stocks when wheat prices had already started crawling up in late July and in August 2007?
The government announced import of wheat on Sept 14 but the TCP floated its first tender for only 0.1 million ton on Sept 24 that was opened on Oct 8.
The government looked indecisive on wheat import programme even by Oct 9 that amounts to giving wheat hoarders a free hand to regulate supplies and prices?
“Wheat will be imported only after there are demands from the Punjab and people start feeling shortages there,’’ a trader in Jodia Bazar reminded this correspondent from his five-decade experience and observations.
