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Pakistan, Iran wheat talks deadlocked: report

May 02, 2012

Farmers carry newly harvested wheat at a field in Punjab.—Reuters Photo
Farmers carry newly harvested wheat at a field in Punjab.—Reuters Photo

ISLAMABAD: Pakistan and Iran have hit deadlock in talks about a barter deal for Pakistani wheat to get round Western sanctions because Tehran is offering too little for the grain, a Pakistani newspaper reported on Wednesday.

Talks held in Tehran ground to a halt when Iran offered a price of $275 per tonne for Pakistani wheat but Pakistan was asking for international pricing of $312 per tonne, a source privy to the meetings told a private newspaper.

In March, Pakistan agreed to export a million tonnes of wheat to Iran in a barter deal as Western sanctions over Tehran's nuclear programme squeeze its ability to pay for food imports.

Food shipments are not targeted under the sanctions, but Iranian companies have been cut off from much of the global banking system because of the financial measures against Tehran, making payments difficult and discouraging traders.

Tehran has ordered a large part of its expected yearly requirement in the past two months—around two million tonnes of wheat from various sources—paying prices over world market levels to get around sanctions and prevent unrest.

Tehran also started talks about major wheat barter deals with India and Pakistan but progress has been slow.

“The Iranian side wants wheat at the imported price of Kazakhstan, but we told them that the quality of Pakistani wheat is better than that of the Central Asian states,” Pakistani Food Security Secretary Shafqat Naghmi was quoted as saying.

“Now, the matter would be brought before the Economic Coordination Committee (ECC) of the Cabinet for approval.”

If the two sides reach agreement, Pakistan would receive around 600,000 tonnes of urea and 200,000 tonnes of iron ore.

Apart from Pakistan, Iran has approached India, and purchased wheat from Russia, Germany, Canada, Brazil and Australia to build up stocks.

US sanctions are targeting Iran's oil trade and central bank to pressure Tehran to shut down its nuclear programme, which Iran says is for peaceful purposes.

A US advisory group said in February that the sanctions are squeezing Iran's oil exports even before they take effect in June.