ISLAMABAD, Sept 22: Federal ministers are divided over a proposal to crack down on individuals hoarding wheat as they feel that action against “some influential people” could create problems for the ruling party in the general election.
According to a report submitted by intelligence agencies a few weeks ago, a number of “major players” are stockpiling wheat. But the government is hesitant to attach “top priority” to the scandal because of the election factor.
Sources told Dawn on Saturday a Karachi-based minister stunned the last meeting of the cabinet’s Economic Coordination Committee (ECC), headed by Prime Minister Shaukat Aziz, after he alleged that a textile mill owner had stockpiled 100,000 tons of wheat.
According to the minister, businessmen — owners of textile mills and petrol stations included — having an adequate storage capacity were involved in hoarding the commodity.
The revelation prompted another minister, from Punjab, to advise the government to avoid launching such an operation ‘for the time being’. He said it might ‘upset influential people’, creating ‘problems’ for the government in an election season.
It has been learnt that black market operators have now decided to make windfall profits by hoarding non-perishable farm produce, eg wheat, rice and sugar, because the stock and real estate markets had failed to yield high returns.
The average price of locally-produced wheat was 200 dollars per ton against the landed cost of the imported variety, which amounted to $415 a ton in September, leaving a profit margin of more than 50 per cent to the hoarders.
According to the sources, the difference between international and domestic prices had compelled profiteers to locally purchase the wheat. If the commodity was not smuggled to neighbouring countries, it could yield a hefty profit, they said.
The sources said that the issue had been mishandled by the government’s economic wizards and this was one of the reasons for the spike in the price of wheat flour.
Initially, the ministry of agriculture had come up with a proposal to export wheat to give a better price to farmers, benefiting only big farmers in Punjab, who have considerable influence in the government, bureaucracy and cabinet.
The drive to export wheat was suspended in May after it was persistently resisted by millers and the Singh government but by then, it had already created distortion in the market.
According to a letter written by Agriculture Development Commissioner Nadir Box Bloch to the Public Accounts Committee on May 25, wheat production was projected at 23.52 million tons. The estimate is now being disputed after a sharp increase in the commodity price.
Sources said that in total contradiction of facts, the agriculture ministry had misinformed the president, before the permission to export wheat, that the country had achieved an unprecedented production of 25 million tons.
The sources cited export of wheat and flour to Afghanistan as one of the reasons for the recent rise in the price of the commodity. There are also reports that wheat is being shipped to Central Asian countries via Afghanistan.
According to sources, wheat smuggling to India, too, could not be ruled out because the price in the Indian market was almost twice that in Pakistan.