ISLAMABAD: Despite granting approval for import of 0.3 million tons of wheat by the government, its cost at Karachi without any taxes will remain viable but after transportation it will become unviable to sell to customers in other parts of the country. It indicates that it will be quite hard for the private sector to import full 0.3 million tons of wheat even after waiving off all duty and taxes.
"You will see that there will be much low quantity of imported wheat because the private sector will find it hard to sell it after incorporating transportation cost from Karachi to all other parts of the country," top official sources told The News here on Thursday.
The Ministry of National Food Security & Research still insists that sufficient wheat was available in the country for fulfilling domestic requirements. At one stage, the secretary Ministry of National Food Security assured the ECC that he guaranteed that there would be no shortage of wheat for the ongoing season. After these assurances, the ECC allowed import of wheat only through the private sector. “We cannot hold stocks, so the available wheat is sufficient to meet two-month requirement as wheat crop will be available in Sindh by March 2020,” they told the ECC meeting.
The Ministry of National Food Security made all-out efforts to make a point that there was no shortage of wheat in the country. Only because of pressure of the media, the government preferred to import wheat but it allowed the private sector to import up to 0.3 million tons by waiving off 60 percent Regulatory Duty (RD) and other taxes.
While quoting the official summary tabled by the Ministry of National Food Security and Research (MNFS&R) before the ECC and then cabinet, sources stated that the food year started with the leftover stock of wheat at the tune of 3.777 million tons. Provincial Crop Reporting Centers had reported the production estimates of wheat crop 2018-19 at the level of 24.479 million tons as compared to the production of 25.51 million tons of the corresponding period of last year.
The total availability of wheat during the current year was estimated at the level of 28.256 million tons, including leftover stock of 3.777 million tons as compared to the national requirement of 26.91 million tons of the country.
The provincial governments reported a production loss of 1.213 million tons because of heavy rain and hailstorm during the maturity stage of wheat. Because of wheat loss and quality issues, the Punjab Food Department and PASSCO could only procure around 4.034 million tons of wheat as compared to the target of 6.250 million tons.
This shows a drastic decrease of 35pc against their allocated target of procurement in Punjab. Sindh being a major wheat producing province did not procure wheat due to reasons known to the provincial government, stated the official summary of the Ministry of National Food Security and Research.
The low wheat procurement by the public sector and higher international wheat prices (up to $254 per ton), dollar exchange rate, inflation and higher utility prices escalated the prices of wheat and wheat flour (Ata) in the local market. The Pakistan Bureau of Statistics in the Weekly Sensitive Index (WSJ) for the week ended on 09-01-2020 has reported wheat and wheat flour prices at the level of Rs894.98 and Rs 943.77 per 20 kg respectively, the summary stated.
Immediate and appropriate measures were taken on the recommendation of MNFS&R and the ECC of the Cabinet in its meeting held on 17-07-2019 by imposing an immediate ban on the export of wheat, wheat flour and wheat products.
The Governments of Punjab and Khyber Pakhtunkhwa started to release their stocks to flour mills of their respective provinces. Additionally, the ECC of the Cabinet allowed PASSCO to release 1.1 million tons of wheat (0.400 MMT for Sindh, 0.450 MMT for KP, 0.050 MMT for Balochistan and 0.02 MMT for Utility Stores Corporation).
The PASSCO and provincial food departments have reported wheat stocks at the level of 4.239 million tons as on 15-01-2020, as compared to 7.436 million tons of the corresponding period of the last year. The International Grains Council (IGC), London, on 13-01-2020 reported the price of Hard Red Winter (HRW) wheat at $238 per ton and Soft Red Winter (SRW) wheat at the level of $254 per ton.
In case of removal of all duties, the import parity for HRW wheat is equal to Rs39,044 per ton (Rs781 per 20 Kg) and for SRW it is at the level of Rs.41,522 per ton (Rs803 per 20 Kg) FoB at Karachi at $=Rs154.91 as on 15-01-2020. At this point of time, the local wheat price is at the range of Rs42,000-45,000 per ton (Rs840-Rs900 per 20 Kg).
In order to decrease the local wheat prices and to cater to the domestic requirement of wheat, the Ministry of National Food Security & Research has proposed to allow import of wheat on the import specifications of wheat, notified in the Gazette of Pakistan on 14-11-2008 on the following options for consideration of the ECC: a) Import of 0.30 million tons of wheat may be allowed through the private sector by removing Regulatory Duty @ 60pc and all taxes on the import specifications of wheat, notified in the Gazette of Pakistan on 14-11-2008: b) Department of Plant Protection will regulate the quantity and quality of wheat to be imported into the country through issuing the Sanitary/Phytosanitary Certificate.
