KARACHI, March 14: A new system for wheat trade is being worked out this season which gives all incentives of the free market to the growers. The two provinces, Sindh and Punjab, and Passco will be allowed to procure five million tons or more grains from the farmers but with a provision that there would be no restriction on inter-district or inter-provincial movement of the wheat.

The federal government will put in place a monitoring system in May to observe supply and price of the wheat in the open market. If it was found that the wheat was being lifted by the speculators, hoarders and profiteers and Sindh, Punjab and Passco are not getting enough quantity in the procurement, the federal government may decide for import as early as June or July.

Officials said that this policy was being designed by the federal government in close consultation with Asian Development Bank. A consultant of the ADB and a senior official of the federal food and agricultural ministry held a meeting with the functionaries of Sindh food department on Monday and are expected to continue their deliberations on Tuesday with the Punjab government officials.

“Sindh’s wheat has reached NWFP market,” an official of Sindh government quoted one of the two members of Islamabad team. He said that harvesting has begun in lower Sindh and some quantity of wheat has trickled down to Punjab and NWFP.

But officials doubt whether Punjab would observe a free wheat trade system as it would render all the powerful functionaries of the provincial food department redundant and worthless. In last season too, Punjab imposed restrictions on inter-provincial wheat department. However, this restriction only deprived the Punjab farmer of due price on his produce but did not help the provincial government or Passco to procure targeted quantity, and finally there were shortages in the province and flour prices were up.

The State Bank is also expected to restrict private sector bank lending in wheat trade to discourage speculation, hoarding and profiteering in wheat trade. “But there is a lot of money in hands of the unscrupulous investors who want to make a quick money from commodities be it wheat, sugar and other items,” a market analyst said.

The wheat harvest this season is expected to be 20 million tons plus. The government has fixed Rs10/kg official price. It means the entire crop is worth Ra200 billion or may be Rs230 billion if the crop size is 22 to 23 million tons. The black money is quantified at 40 to 50 per cent of the country’s GDP which means 40 to 45 billion dollars (Rs 2.5 trillion plus) in black money is floating around in search for investment that should give a handsome return.

With a weak, ineffective and corrupt regulatory system, commodity trade has remained a green pasture for all the profiteers and hoarders for last more than 50 years. Market analysts doubt if the new open market system will help in providing wheat bread at reasonable price to the common man.