KARACHI, Dec 22: Pakistan will sell 50,000 tons of milling wheat to Bangladesh in a government-to-government deal at a discounted price despite a ban on the export of the commodity, a senior government official said on Friday.

Ismail Qureshi, the secretary at the Ministry of Food and Agriculture, said wheat would be sold to Bangladesh, which traditionally buys its wheat from India, at a price lower than the existing international price.

“We have partially lifted the ban on exports just to finalise this deal and also confirmed to the Bangladeshis that the wheat will be released very soon,” Qureshi said.

“The offered price is much lower than the world market price,” he said, but declined to elaborate.

Agriculture officials said the state-run Pakistan Agriculture Supply and Storage Corporation (Passco) was arranging the supplies from stocks of the Punjab provincial government, following a request from Bangladesh's government this month.

“The Bangladeshis had asked for 100,000 tons but the government agreed to supply half of what they required,” said another official at the agriculture ministry.

“We can sell another 50,000 tons in a month or so but only after assessing the stock situation.”

Agriculture officials want to end a two-and-a-half-year ban on the duty-free export of wheat and have since been evaluating a proposal to allow exports, following forecasts of a better-than-expected harvest of 21.7 million tons from the current 2006/07 crop.

Pakistan imposed a 15 per cent export duty and then banned the export of wheat in May 2004, though the state-run Trading Corporation of Pakistan had stopped exporting a year earlier because of domestic supply shortfalls.

Pakistan now has a surplus of more than 1.5 million tons and agriculture officials are worried that rising stocks might push domestic prices below a government minimum of Rs415 per 40 kg, fixed to support farmers.

Qureshi said the government was closely monitoring wheat demand in the international market and would take a decision on allowing commercial exports “very soon.”

“We definitely have an exportable surplus so we can export a limited quantity next year,” he said.

A decision on exports is expected when the Economic Coordination Committee, the government's main economic decision-making body, meets next month, he said.

Pakistan's annual wheat consumption is 22m tons. It has carryover stocks of 2.1m tons from last year's crop, leaving an exportable surplus of more than 1.5m tons.

Before the export ban, Pakistan's main markets were the Middle East and Africa. It exported 1.7 million tons of wheat in the 2002/03 fiscal year.—Reuters