Govt mulls dumping additional wheat to check runaway domestic prices

LAHORE: Amid rising prices of wheat, particularly in Sindh, the federal government is weighing either releasing public sector stocks to flour mills or granting permission for the import of grains, industry sources said on Thursday.

The price of wheat and its products in Sindh, especially in the urban areas including Karachi, have gone through the roof in the last several weeks, with successive increases in the price of flour.

Wheat is about Rs400-500 per 100 kg costlier in Karachi if compared with its price in central Punjab, said a trader. This price uptrend is primarily an upshot of Sindh government’s under-buying of wheat during this year’s procurement drive, leaving consumers at the mercy of market forces.

Punjab and Khyber Pakhtunkhawa provinces are also not immune to this bullish trend in grain market. There has been an about Rs300 increase in the per 100kg bag of wheat in the open market in the Punjab. The provincial government has started to issue grain from official warehouses to flour mills with a view to increase supplies. Punjab has sufficient stocks in hand and may succeed in its quest to meet the demand up to April next year before the arrival of new crop. However, Pakistan Agricultural Storage and Services Corporation (PASSCO) is apparently not that much lucky. Although, federal government has tasked the PASSCO to supply 0.4 million tons of wheat to flour millers of Karachi for checking prices, the move may not leave a lasting impact on demand and supply situation in urban Sindh in favour of consumers, given low supplies available with public sector department.

The PASSCO this year could hardly purchase 0.7 million tons of wheat out of a target of 1.1 million tons, which is the lowest quantity procured in the last four years. The quantity of PASSCO bought in 2019-20 period is less than even the average 0.9 million tons procured in the last three years. The PASSCO’s pathetic performance in wheat operation left the government high and dry in its effort to arrest the rising trend of prices, while easing supplies, sources said.

Finger are crossed regarding the role of the PASSCO for effectively meeting grain requirements of deficient provinces by providing 0.4 million tons wheat to Sindh flour mills and 0.2 million ton to KPK flour mills to control prices of flour, the sources said.

Total stocks lying with PASSCO stand at 1.6 million tons after meeting needs of defence forces, Gilgit-Baltistant, and Azad Jammu and Kashmir. According to an assessment, urban and rural Sindh’s monthly requirement stands at 75,000 tons to 100,000 tons each. This mean, around 1.2 million tons of wheat is needed to meet the requirement of Sindh till March 2019. Given the demand and supply situation, wheat market situation is likely to remain tight in coming months.

In this scenario, an industry source said, import of wheat was another option being pondered upon by the federal government seriously. In a few months, federal government may allow import of wheat to private parties to meet grain needs of Karachi, the source added.

On the other hand, Punjab wants supply from the PASSCO as well. The province for the time being is comfortable with this sticky situation. However, as all federating units except Punjab are short of grain this year along with shabby state of affairs at PASSCO, grain availability situation may go from worse to worst by end of this year, the market insiders said.

In these circumstances, despite bit tight supplies, export of wheat products continues to Afghanistan. It is a strategic decision in nature and should be continued keeping in view of getting hold of this important market. A senior official said that Punjab had a well thought-out release plan in place. “We have sufficient stock with us including buffer stocks. Thus, we are confident that we will meet demand of wheat with the provinces efficiently,” the official added.