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June 13, 2020

Centre, Punjab expect 2mln tons wheat import to bridge shortfall

Business

June 13, 2020

LAHORE: The federal Ministry for Food Security and Research, and Punjab government anticipate imports of two million tons of wheat in about nine months with a view to bridge production shortfall in the country.

The ministry estimated 1.408 million tons wheat shortfall, and called for one million tons of imports through private sector in addition to already allowed 0.5 million tons. On the other hand, Punjab also hinted 0.5 million tons of wheat import to keep prices at bay.

The summary moved by the Ministry for Food Security and Research, referring to a high level meeting held under the chairmanship of the prime minister on June 7, 2020, stated that the availability of wheat and wheat flour across the country, being the staple food, was deliberated in detail.

The provincial governments, during the meeting of the Wheat Review Committee, held on June 5, 2020, informed an estimated aggregate wheat production of 25.457 million tons.

With the addition of carry forward stock of 0.605 million tons, the total availability of wheat in the country would be 26.062 million tons in 2020-21, as compared to the national consumption of 27.47 million tons (including 10 percent quantity on account of strategic reserves, seed and feed purposes).

Therefore, there would be a shortfall of 1.408 million tons of wheat in the country during 2020-21.

To bridge the gap between domestic supply and demand of wheat to ensure food security, decrease/stabilise the local wheat prices, and to replenish the strategic reserves, the ministry called for import of one million tons of wheat through the private sector for an unlimited period, in the Hs Code Category of wheat grain- 1001.1900 and 1001.9900 by abolishing 60 percent regulatory duty, 11 percent custom duty, 17 percent sales tax, and six percent withholding tax.

Waiver in these duties might also be allowed for 0.50 million tons of wheat import, already allowed by the Economic Coordination Committee of the Cabinet on February, 19, 2020.

Khaleeq Arshad, a wheat processor, importer and exporter said that the announcement of the decision was necessary for scaling down high prices of wheat in the market. However, he hastened to add, that the government must not leave import of wheat merely with the private sector. Instead, he observed, a proactive approach was need to fill the gap in demand and supply of grains as soon as possible.

For this purpose, he maintained that the federal and Punjab government should float tender for local importers to carry out whole wheat import process in a time-bound manner. In this way, wheat imports would start early, which was also required for fetching good prices prevalent in the market as well as reversing high prices, which were hovering around Rs1,750-Rs1,800/40kg in Lahore, a major wheat consuming centre.

Majid Abdullah, a progressive flour mill owner said policymakers had finally decided about wheat import in clear terms, a notion he had been floating for quite some time.

He was of the view that the next two to three months were very critical for wheat sector as government did not allow flour mills to purchase wheat to meet their requirements in this dry period. It was possible that wheat import shipments do not reach Pakistani ports in a couple of months, “so how will government ensure stable grain prices in this period” was a question worth ponderings.

To add fuel to the already explosive wheat and flour market, he said, the federal government asked provinces to allow free movement of grains by removing curbs imposed on inter-provincial transportation of wheat in terms of all check posts established between various federating units. Moreover, provincial governments have been directed to take appropriate measures to curb hoarding and profiteering in their respective provinces.

However, Abdullah said there was no step for improving the availability of wheat in the market, “as imports are not possible in next six to eight weeks”.

The government should start releasing wheat from official stocks to flour mills as a stopgap arrangement. Otherwise, he warned, the price of wheat and flour would not be kept at a certain level.