KARACHI, Jan 23: The country may suffer over Rs222 million loss on export of 0.5 million tons of wheat as the government has received offers which are much below the actual cost being incurred on its procurement and other incidental charges.
The government has fixed wheat procurement price at Rs450 per 40-kg which comes to Rs11,250 per ton and after adding other charges of around Rs645 — loading, unloading, transportation, storage and finance — for bringing the commodity from Punjab to the port city, the actual cost shoots up to Rs11,895 per ton, exporters told Dawn here on Tuesday.
As per government estimates the country is going to harvest bumper wheat crop of over 22 million tons which will give an exportable surplus of around 2 million tons.
Under the government instructions, the Food Department of Punjab and Sindh had issued tenders for the export of 0.4 million tons and 50,000 tons of wheat, respectively. However, the private sector exporters had been allowed to export 50,000 tons making the total of 0.5 million tons.
This quantity is being taken as first export sale out of expected two million tons exportable surplus.
The Punjab Food Department had invited bids for the sale of 0.5 million tons of wheat and the last date for receiving bids was January 18, 2007. According to the results the highest bid was of Rs11,650 per ton with a variation of Rs100 owing to packing material.
This means that if the government decides to sell wheat to the highest bidder who is reported to be keen to have poly bags packing for which the bid price had been quoted at Rs11,450 per ton, this would mean that the country would suffer a loss of Rs445 per ton or Rs222 million on the export of 0.5 million tons.
However, the international wheat market scenario is fast changing as crop from Argentina, United States and Canada have started flowing and as result prices are easing.
According to trade sources wheat prices had now started coming down in the range of $200 to $215 per ton from late last year’s $240 per ton.
Therefore, it is being apprehended that by the time Pakistan enters the world market in a big way the prices may further come down and this may result in huge losses.
Even if the country manages to sale wheat at the price offered to Punjab Food Department this will result in a colossal loss of Rs890 million on the export of two million tons surplus wheat.
The developed countries could offload any quantities of wheat on the world market at any given price because their governments are providing huge subsidies of $350 billion per annum to their agriculture sector.