KARACHI: Sindh Chief Minister Syed Qaim Ali Shah on Tuesday demanded that Prime Minister Nawaz Sharif order immediate ban on wheat import, explaining that the permission granted by the federal government to import wheat has caused losses to the provincial government.

This year, Mr Shah said, the Sindh food department procured 1.216 million tonnes of indigenous wheat that was close to the target of 1.3 million tonnes fixed by the federal government. He said the other provinces also procured sufficient wheat due to the bumper crop which was to the tune of 25.29 million tonnes against 24.3 million tonnes of last year.

Despite the bumper wheat crop, Mr Shah said, the federal government without consulting the Sindh government had given permission for wheat import free of all kinds of federal taxes and duties. Subsequently, he said, 0.7 million tonnes substandard wheat, which was injurious to human consumption, was imported.

Besides the government storage houses were fully occupied, he said, adding that the situation would not only affect the wheat procurement campaign of the next crop but also posed threat of infestation to the wheat stocks.

In a letter written to the prime minister, Mr Shah drew his attention towards the issue of indigenous wheat disposal due to the arrival of imported wheat from Ukraine or Russia.

The chief minister expressed concern over the permission granted by the federal government for wheat import despite the bumper crop this year.

He asked the federal government to bear cost of Rs7.5 billion on retention of stock and provide rebate of $50 per tonne to attract exporters to offload the surplus wheat from Sindh, otherwise all the losses would have to be borne by the federal government.

On a Sindh cabinet recommendation, the economic coordination committee imposed 20 per cent regulatory duty on Nov 11 when most of the imported wheat stock had already been imported since August, he recalled.

The arrival of the imported wheat badly affected the market in Sindh and decreased release of wheat to flour mills, making it difficult for the Sindh government to pay back borrowings to the commercial banks, the chief minister said. In this situation, only Rs3.75 billion had been paid back while Rs58 billion borrowing with a mark-up was still outstanding, he said.

In case the Sindh government defaulted on its sovereign guarantees commercial banks would be very reluctant to provide financing for the next crop, he added.

“This is a matter of serious concern for the Sindh government that has been doing its best to support growers who produced around 4.002 million metric tonnes of wheat and injected in national economy,” he said.

The federal government would be responsible if the present stocks were carried forward, thereby endangering the economic health of Sindh, said the chief minister.

Published in Dawn, January 1st, 2015