THE government is now believed to be of the view that the only way to get rid of the threatening glut of wheat is to sell most of it at lower prices or at the prices it can find buyers, even though it may be a lose-lose strategy.

The new thinking in the food security ministry describes farmers as the first priority as far as purchasing wheat is concerned to ensure they are fully benefited and the middlemen come next. The new crop is expected to be 25.7m tonnes, narrowly missing the target.

According to federal minister Sikander Hayat Bosan, the fact that the country has sufficient stock of wheat at the moment will not prevent Pakistan Agriculture Supplies and Storage Corporation (Passco) and other relevant authorities from purchasing wheat. Besides, this year, the wheat crop has been delayed by about 20 days and the chances are that major part of the new stock will be sold by the farmers, especially in Punjab.

Eventually it is stipulated that wheat export price of even $255-260 per tonne may be set.The price on which it can sell 0.5m tonnes of the commodity to Indonesia is expected to be around $240 per tonne. And Bangladesh may also agree to buy 300,000 tonnes of wheat at the same price. In January, Pakistani traders were insisting to sell their stock at $300-345 per tonne but couldn’t find a buyer.

The Economic Coordination Committee of the Cabinet had earlier allowed the Punjab and Sindh governments to export up to 800,000 tonnes at a rebate of $55 per tonne and 400,000 tonnes at a rebate of $45 per tonne, respectively. But, under the given circumstances, the federal and provincial governments are already providing a rebate of $90 per tonne to exporters. The surplus stock that Sindh has to dispose of before the arrival of new crop is 700,000 tonnes, while that of Punjab is around 2m tonnes.

Sindh has so far exported 70,000 tonnes in the current season, mostly to Afghanistan. After procuring about 900,000 tonnes from the new crop, the total stock of the province for the next season would reach 1.5m tonnes. Meanwhile, the State Bank of Pakistan has extended export deadline for Sindh and Punjab by 30 days. Now exporters are to complete lifting operations by April 30, for Sindh and May 15, for Punjab. Once the deal with Indonesia is formalised, the first consignment of about 250,000 tonnes of wheat is expected to be shipped in May.

Another problem is that some buyers in the international market are putting price of Pakistani wheat at par, or near, with the Ukrainian one, ignoring the fact that quality of our grain is much better. In recent days, the Ukrainian wheat was available even at $190 per tonne but its price has now gone up to $225 per tonne (freight on board) at Chicago market.

Meanwhile, the latest crop estimates with the ministry of food security show that the country may miss wheat production target of 26.3m tonnes fixed by the Federal Committee on Agriculture for 2014-15 because of extreme weather conditions and unseasonal heavy rains in the past three months across the country causing damages to the wheat crop.

As a result, the country is likely to have 25.7m tonnes crop this season. Punjab, which was expecting to produce a record 20m-tonne-crop, will, however, meet its target of 19.6m tonnes despite crop losses in Lahore and Gujranwala divisions. Rainfall before the harvest time, which is April and May, as has been experienced by some parts of south Punjab this year is considered some what devastating for the farming community.

The Sindh government has not yet come out with a wheat procurement plan and it is expected it may reduce procurement target from 1.3m tonnes of last year to 0.9m tonnes this year. The farmers organisations have, meanwhile, expressed dissatisfaction over the arrangements. A large number of farmers have not yet received gunny bags for sale of their commodity.

The erratic weather that the farmers faced this spring and may continue to experience with more frequency and intensity in the years ahead is the impact of the climate change.

A study by WWF-Pakistan says that agriculture in Pakistan could face a loss of up to 10pc of its output by 2040 due to climate change and suggests measures to minimise the losses.

Published in Dawn, Economic & Business, April 27th, 2015

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