WHOLESALE prices of wheat have crashed on arrival of the new crop and are expected to fall further once the supplies from farms improve.
Wheat harvesting has begun in some parts of Sindh and farmers in Punjab are preparing to start reaping the new crop from mid-April.
Provincial wheat procurement plans have been chalked out and provinces are busy setting up wheat procurement centres to buy the new crop from farmers for supplying to flour mills at subsidised rates and for building up buffer stocks.
Centrally-run Pakistan Agricultural Storages and Services Corporation has decided to purchase nine million tonnes of grains to maintain strategic reserves which is in addition to targeted purchases by provinces. Punjab is set to buy 4.5 million tonnes, Sindh 1.3m tonnes, Balochistan 100,000 tonnes and KPK 50,000 tonnes.
“By end-March, no large physical delivery of fresh wheat was seen in Jodia Bazar, but news about harvesting of a bumper crop in Sindh (of about four million tonnes) forced traders sitting on stocks of old wheat to lower the prices,” explained a local commodity dealer.
Prices of old wheat, accordingly, fell to Rs2900-Rs3000 per 100-kg from Rs3400-Rs3500 a month earlier. Some dealers at Akbari Mandi, Lahore, told Dawn over the telephone that prices there still range between Rs3000-Rs3100 per 100kg because harvesting of wheat in Punjab would take at least a fortnight to begin.
“Wheat grains of new crop are slightly costlier ranging between Rs3100-Rs3200 per 100kg as only a few truckloads of 30 tonnes each have so far reached Karachi,” an approved buying agent of Pakistan Flour Mills Association told Dawn. “But we believe supplies will improve from the first week of April when harvesting would start at a large scale and prices may slip further.”
In Punjab, new wheat supplies have not reached the market and whatever easing of prices has been is “because of reports that the country will harvest a bumper crop this year,” said a Lahore-based dealer.
Wheat production this year is expected to range between 25 and 26 million tonnes of which 19 million tonnes is likely to come from fields in Punjab.
Commodity dealers say that as temperatures in parts of Punjab, including Potohar region, are rising a bit slower than in Sindh and as occasional rains in Islamabad and northern parts of the country stopped much later than elsewhere in the country, local wheat demand is strong. “That’s why the price-decline at Akbari Mandi is not as sharp as in Jodia Bazar,” explained a commodity dealer.
Tea: During the month of March, prices of tea reflected full impact of the changes introduced in sales tax on February 26. Not only the prices of loose tea of various grades went up but all leading manufacturers also increased the prices of branded tea packs despite a slight fall in demand with the advent of summer season. Different packs of famous brands of tea became costlier by Rs75-Rs100 per kg, whereas loose tea of different grades also gained Rs70-Rs80 per kg depending upon their quality. By the end of February, the Federal Board of Revenue had increased sales tax on tea from a concessional rate of five per cent to the standard 16 per cent.
Pakistan Tea Association Chairman Mr. Hamid Khawaja fears that the increase in sales tax on tea would promote smuggling of this item because the resultant hike in price will make non-tax-paid unofficial entry of the beverage easier. The Association took up the matter with tax authorities but could not succeed in seeking reversal of the change in sales tax till the filing of this report.
An eight per cent increase in tea imports (to about 90,000 tonnes in July-February FY13 against 83,000 tonnes in the year-ago period) has already worried traders who believe that part of the additional imports would be smuggled out of Pakistan duty-free under the garb of Afghanistan transit trade.
Distributing agency of a leading brand of blended tea told Dawn that the concession in sales tax granted in the federal budget of 2011-2012 had enabled tea makers to cut prices and capture a larger share of the market. “This process will come to a halt now,” he feared and went on to cite launching, in the last one-and-a-half years, of consumer-friendly tea packs of various sizes and in various packaging shapes including jars and sachets as a result of the tea production boom. According to Pakistan Bureau of Statistics, blended tea production in the country had gone up by more than 25 per cent y/y to 53,200 tonnes during July-January FY13 from about 42,500 tonnes in the same period of FY12.
Rice: Prices of Basmati rice remained largely stable during the month of March in spite of higher export-led demand. “The reason is the new crop is larger, about 7.2 million tonnes (against 6.9m tonnes of the last year),” said a dealer at Jodia Bazar adding that most varieties of rice had already recorded price gains between October 2012 and February 2013. “As for now, the supply is adequate and unless there’s a big increase in exports prices may remains stable.”
In January and February, average monthly exports of Basmati have been higher than in the first half of this fiscal year. This trend is on, but dealers say what keeps prices from rising now is that large exporters had made huge buying in previous months and no unusually big buying was seen in March. They say that the onset of the summer season may, however, result in a slight increase in prices of non-Basmati rice in coming months because of higher intake, particularly in Sindh and in Balochistan.
Pulses: Prices of pulses fell after skyrocketing in the last week of February due to increase in withholding tax — chiefly because of improved local supplies and a declining trend in the international market (see table). The taxation body had also levied full five per cent withholding tax on imports of pulses which were subject to just two per cent tax at import stage and were exempted from the remaining three per cent.— Mohiuddin Aazim