Who benefited from wheat import?

ISLAMABAD: Despite being aware of bumper wheat crop production, the outgoing caretaker government preferred to import 3.44 million tonnes of wheat by the end of March 2024 and doled out hard-earned $1.05 billion foreign exchange, The News has learnt.

The permission for wheat import was allowed when the prices of wheat started decreasing in the international market. The minimum support price was fixed at Rs3,900 per 40-kg on the higher side, and then the import of wheat was allowed in bulk so the importers and middlemen could exploit and benefit from the situation and earn lofty profits at the cost of voiceless farmers and consumers.

The former caretaker minister for food and agriculture has started distancing himself from the decision of importing wheat and, sources close to him, claimed that he had opposed the decision by writing a note on the official documents.

Prime Minister Shehbaz Sharif has appointed an inquiry committee to ascertain as to who exploited the situation to earn heavy and unjustified profits and fix responsibility. The caretaker government, at the forum of the Economic Coordination Committee (ECC), under chairperson of former minister for finance Dr Shamshad Akhtar, had approved the summary for allowing import of 1 million tonnes of wheat. The data, compiled by Pakistan Bureau of Statistics (PBS), showed that the import of wheat stood at 3.44 million tonnes at an estimated cost of Rs282.975 billion, equivalent to $1.005 billion, during July-March period of 2023-24 within the deadline of March 31, 2024. However, the import of wheat continued in April 2024 on the pretext that the vessels sent from abroad were on their way and would reach Pakistan in a few days.

The data did not include the imported wheat of April 2024, as alone on the Eid day, around six vessels with imported wheat reached their destinations in Pakistan. It shows that the total imported wheat went up close to 4 million tonnes by doling out more dollars when Pakistan struggled a lot for securing $3 billion under the Standby Arrangement (SBA) programme in the same period.

The domestic farmers have been left in the lurch as they have produced a bumper wheat crop ranging around 30-32 million tonnes. The government fixed the minimum support price of Rs3,900 per 40-kg, but farmers are now forced to sell out their produce at around Rs2,800-3,000 per 40-kg.

The procurement of wheat has already been slashed from 7.8 million tonnes in the last fiscal year to 4.44 million tonnes, almost 50 per cent less than the last year, but even then the government was unable to accomplish the task. There is an element of circular debt of commodities, which hovers around Rs600 billion to Rs1,000 billion.

The official documents presented before the ECC showed that wheat availability for 2023-24 was estimated at 29.81MMT, comprising production of 28.18MMT and public carry-forward stock of 1.63MMT. Bumper wheat production was sufficient to cater to national human consumption; however, for maintaining strategic reserves of 2MMT, there would be a shortfall of 2.40MMT for the year 2023-24.

Food Year 2023 started (as on 1-5-2023) with the public wheat stocks of PASSCO and provincial food departments at the level of 7.886MMT, including stock of 2.85MMT with PASSCO. The federal cabinet, on July 26, 2023 allocated 2.73MMT of wheat amongst recipients of PASSCO as per their requirements. Therefore, on April 1, 2024 at the culmination of season, PASSCO was expected to have carry-forward stock of 0.11MT.

Local wheat prices for the week ended on October 5, 2023 were reported by the PBS at Rs4,823/40-kg or Rs121/kg, whereas wheat flour prices were at Rs2,789/20-kg or Rs139/kg. Price escalation factors are hoarding, smuggling, loose public stocks and delay in public stock releases to flour mills. Due to these factors, public sector (PASSCO and provincial food departments) could only achieve 75pc assigned target of wheat procurement i.e. 5.87MMT against 7.80MMT assigned target.

Price of wheat has started declining and will be further reduced as and when maximum quantity of imported wheat will reach the country and public releases policy to be announced by the respective provincial governments.

The International Grains Council on October 6, 2023 reported price of black sea wheat at US$245/MT (FOB). With addition of freight charges, withholding Tax @ 6pc and management cost of TCP @ 2pc, the CFR price of wheat was estimated at Rs86,811/MT or Rs3,472/40-kg at Karachi as compared to the local wheat price of Rs121/kg.

Summary for import of wheat was submitted by MNFS&R to the ECC of the Cabinet on July 27, 2023 with recommendation of import of 1MMT of wheat through Trading Corporation of Pakistan (TCP). However, the summary was ‘Deferred’ by the ECC of the Cabinet in its meeting held on August 8, 2023. The summary was re-submitted to the caretaker government on September 1, 2023. The prime minister, as the minister in-charge for MNFS&R, approved the summary on September 4, 2023 with the direction of preparation and implementation of import plan, time-line for the private sector and synchronization of TCP and private import plan.

In an interview to a private TV channel, former caretaker minister for National Food Security Dr Kauser Abdullah Malik said the decision to import wheat was taken before taking his charge of the office. He said the summary of five lakhs to one million tonnes wheat import was forwarded. “When I came to know, I said we have sufficient wheat in store,” former minister said. “I said that wheat import is not necessary, don’t import grain by the TCP.”

He said, “The matter when discussed in the ECC, they said the private sector should be entrusted for the import.”

News Desk adds: Denying any wrongdoing in the import of wheat, former caretaker prime minister Anwaarul Haq Kakar said he was ready to join the investigation into the excessive import of the staple crop that triggered a crisis in the country.

“I will appear before the wheat [inquiry] committee if it summons me,” the ex-premier said in an interview with a local TV channel on Sunday.

Kakar, now a senator, said no new law was introduced to import wheat during his tenure, and his government only “encouraged the private sector” to import the staple crop.

The former caretaker premier said the private sector was allowed to import wheat under the Statutory Regulatory Orders (SRO) that was issued during the tenure of Pakistan Tehreek-e-Insaf (PTI)-led government.

Kakar said his administration only encouraged the private sector to import the wheat under the same SRO in a bid to save taxpayers’ money.

The former PM also said the Economic Coordination Committee (ECC) estimated that 3 to 4 million metric tonnes of wheat were required in the country. He also denied that corruption or any wrongdoing was committed in the import of staple crop.

Responding to a question that the excessive wheat imports caused a Rs400 billion loss to the exchequer, the former interim premier said such allegations were akin to “inspector Jamshed stories that he heard in his childhood”.