KARACHI, May 5: After a gap of over two years, Pakistan is keen to allow wheat exports, amid fears that rising stocks from a good harvest this year could dent domestic prices, trade and government officials said on Friday.

Last month, the agriculture ministry estimated 20.5 million tons of harvest from the current crop year of 2006-07, but a latest data rekindle hopes of 21 million tons of output on better availability of irrigation water.

“Yes, we are considering allowing the export of a certain quantity of quality wheat this season,” Qadir Bux Baloch, Wheat Commissioner at the agriculture ministry, told Reuters.

“We have a surplus of two million tons to 2.5 million tons, which we can offer in the international market.”

But he said a final decision on allowing exports rested with the Economic Coordination Committee of cabinet.

In May 2004, Pakistan officially banned wheat exports and withdrew its export refund policy, under which traders got a maximum of Rs2,500 per ton on shipment of cargoes to cover the cost of transport and cleaning of wheat.

The government stopped wheat exports through the Trading Corporation of Pakistan in May 2003.

Before imposing a ban, Pakistan found a big market in the Middle East and Africa. It exported 1.7 million tons of wheat in the fiscal year 2002-03.

Mr Baluch said the export plans, if materialised, would not only help in getting good returns to farmers on their harvest but would also allow Pakistan to re-enter the world wheat export trade.

“We have been absent from the world market as a seller for over two years but now we have enough surplus to offer quite a good quantity,” he said.

He said the government was keen to resume supplies to Afghanistan and the Middle East.

“Afghan market has a potential of 600,000 tons, while in the Middle East we can sell 500,000 to 600,000 tons of quality grain,” he said.

Another official at the agriculture ministry said the move to allow exports was under consideration after domestic prices started to fall following reports of a good crop.

“The ministry feels prices might dip further after the whole harvest is in the market, as we also have over two million tons of carry-forward stocks from the previous year’s crop,” said the official, who asked not to be named.

“So, chances are high that the heavy stocks would bring the prices below the government’s minimum support price of Rs415 (per 40 kg) for farmers.”

Total annual domestic needs are 22 million tons.

The official said the government was also holding wheat much above its usual buffer stock levels and fresh arrivals from the new crops have been creating a storage problem.

Karachi-based traders said they could explore the possibility of exporting wheat to neighbouring India, Afghanistan and the Middle East, despite globally soft prices, if the government resumes its export refund policy.

“The government should take a decision immediately, as India is in the need of huge quantity of wheat and we can supply over a million tons there,” said a Karachi-based wheat exporter.

“But we would need subsidies on export as our prices would be $185 to $200 per ton, which are much higher than the world market.”—Reuters