Agro Perspectiva

Pakistan. Ban on wheat export being lifted for one month

25.06.2010 12:39 "Agro Perspectiva" (Kyiv) — The government is to relax the ban on wheat export for one month after formal clearance from the Economic Co-ordination Committee (ECC) of the Cabinet as efforts to strike government-to-government deals have not been fruitful, a top government official told Business Recorder here on Wednesday. The ECC was scheduled to meet on June 22, but it could not meet due to the Finance Minister’s other more urgent engagements. On May 11, 2010, a meeting of the committee constituted by the Prime Minister to finalise arrangements for export of wheat was held under the chairmanship of the Finance Minister, Hafeez Sheikh. The meeting was attended by members of the committee which included Secretary Finance, Special Secretary Finance, Secretary Commerce and Secretary Minfa. According to a well placed official Secretary Minfa apprised the meeting of the current stock position of wheat in the public sector. The committee was apprised that carryforward stock from last year’s crop was 4.2 million tons, whereas current procurement figures had reached 4.5 million tons and the momentum would continue for the next ten days. It was informed that with the participation of the private sector in the purchase of wheat the prices had stabilised. The committee was briefed that since the decision taken by the Prime Minister on the issue, Minfa had held a series of meetings with Afghanistan, and Bangladesh to explore the possibility of government-to-government level sale of wheat. However, so far the request from Yemen had been received for purchase of approximately 500,000 tons of wheat. An NGO, based in Kandahar, had also expressed interest in purchase of wheat through the Foreign Office, without specifying quantity. According to the official, Secretary Commerce Zahar Mahmood said that efforts were being made through the Trade Officers for sale of wheat, but no fruitful progress had been made. It was observed that in view of the international prices, the government would have to give substantial amount of subsidy in order to make the wheat competitive in the international market. The committee calculated Rs 27 billion as subsidy for export of two million tons of wheat. In the alternative, if the wheat stocks were not disposed of, the carrying cost or storage cost would be Rs 5 billion for one million tons of wheat, the official claimed which was also confirmed from the official documents provided to this scribe. The official further stated that attention was drawn towards the limited shelf life of old stocks of wheat, whose quantity may deteriorate if not consumed or disposed of. The Finance Minister observed that the explanatory effort until now had not been fruitful as yet since the announcement of the decision for export of wheat by the Prime Minister. After due deliberations, following recommendations were made by the committee: (i) For government level export, Trading Corporation of Pakistan (TCP) would float a series of tenders on weekly staggered basis for 200,000 tons of wheat; (ii) Locally based private exporters could participate in the bidding, but it needed to be ensured that the wheat was not sold in the local market and it left Pakistani shores. Once tenders were opened, within ten days the committee would finalise the final sale price;(iii) as subsidy was involved in the TCP export, a decision of the ECC of the Cabinet would be required in this case; (iv) to allow the private sector in the export, ban on export of wheat would have to be lifted initially for one month starting from 1st June till 30th June, 2010. Final decision would be taken by the ECC; (v) as Pakistani wheat had distinct quality, its specifications would be required at the time of tendering. Minfa would provide wheat specification in two days time; (vi) efforts on bilateral side for government level sale of wheat must continue. Minfa would assist MoC by holding meetings with those who had shown interest in purchase of wheat; and (vii) offer price should be realistic and old or fresh wheat stocks must be disposed of, depending on the preference of the importer.