KARACHI, Oct 18: The exports of value-added wheat products — wheat flour, pasta, vermicelli, macaroni and other confectionery items — are in doldrums following a change in the government policy wherein exporters have been asked to get their wheat supplies through tenders.
The manufacturers of value added wheat products normally need small quantities of wheat at frequent intervals to meet their export contracts. But this is not possible now as they will have to participate in tender to get their small quantities which seems difficult in the presence of big exporters of wheat grain.
There is also a big demand for white flour (plain flour) as well as wheat flour (Atta), particularly from those countries where expatriate Pakistanis are living in large number and mostly use the flour for making their traditional ‘Chapati’.
Presently, much of value-added wheat products demand is coming from African countries, Middle East and Far East, including Malaysian and Indonesian markets.
The government’s deregulation policy for wheat export business, inducting the private sector in exports also gave a boost to export of value-added wheat products.
Initially, the government fixed a total cost of Rs8,500 per ton for Fair Average Quality (FAQ) wheat to be paid by an exporter, which included Rs5,000 in shape of local LC, bank draft or a pay order. Whereas the balance of Rs3,500 was a bank guarantee which is refundable after consignment is exported.
Thereafter, the government from July this year, slashed the total cost of wheat for private exporters to Rs8,250 per tons, which includes Rs5,050 per ton price of wheat and Rs3,200 refundable bank guarantee. There was further cut in total cost in September 2002, to Rs8,200 per ton, comprising Rs4,900 per ton wheat price and Rs3,300 refundable bank guarantee.
However, small exporters were asked to pay total cost and there was no bank guarantee.
Under this arrangement the manufacturers of value-added wheat products had been getting their wheat supplies from PASSCO, and there was no problem for them with regard to quantity.
However, from September 2002, a change in the government policy to supply wheat to private sector exporters only through tenders has suddenly put manufacturers of value added wheat products in a difficult situation as they can not compete with wheat grain exporters in terms of quantity.
Association of Wheat Products Exporters & Millers (AWPEM) chairman Syed Johar Ali Qandhari told Dawn the government policy to include private sector in wheat export business helped “us capture a sizable market of wheat flour and other value-added wheat products.”
“However, the recent government decision only to provide wheat to private exporters through tender has adversely affected our exports as the manufacturers of value added wheat products who normally need small quantities at frequent intervals can not compete with wheat grain exporters in term of quantity,” he added.
Qandhari said that PASSCO which had been supplying wheat to small exporters and value added producers even stopped to give wheat to them which has put our entire export business in jeopardy.
He urged the government to allow such exporters to get their wheat requirements from regional food departments of the provinces, particularly when Sindh has 0.1 million tons exportable surplus and Punjab one million tons.
“It is extremely disturbing that such a situation has emerged at a time when our members of value added products have began to capture world markets and are earning sizable foreign exchange for the country,” he said.