Government to pay huge subsidy on imported wheat

The government will have to pay a subsidy of Rs 100 billion on imported wheat in order to bring the prices of the commodity at par with local market rates, well-placed sources told Business Recorder on Monday. The government has decided to import 2.5 million tons wheat in fiscal 2008-09 to be provided to the consumers on subsidised rates costing the national exchequer Rs 100 billion.
In fiscal year 2007-08, the government had imported 1.8 million tons wheat and provided Rs 45 billion as subsidy. Internationally, wheat prices have decreased to $343 per ton from $351 per ton. "In international market, wheat has started arriving, so the prices started decreasing. But the situation will be different after September when the stocks would deplete," sources said. The International Grains Council has estimated that world-wide wheat production in 2008-09 may increase to 645 million metric tons against 604 million metric tons in 2007-08 while total consumption is estimated to be around 630 million metric tons against 611 million metric tons last year.
According to the latest estimates about wheat production in 2007-08, sources told this scribe that it is expected to be around 21.8 million tons while total consumption may be around 22 million metric tons.
Sources said the government does not have a proper mechanism for measuring the per acre yield. Wrong estimates about the wheat production in 2006-07 made the country face acute wheat and flour shortages. The overall production was 22 million tons that was estimated to be 23.5 million tons. On the other hand, the decision of the government to export 0.5 million tons of wheat amid high international prices provided an opportunity to smugglers and the hoarders to earn maximum profits.
Sources claimed that almost one million tons wheat has been hoarded while smuggling of the commodity is still going on. "Despite the government's claim of deploying Rangers at borders, wheat smuggling has not yet been controlled," sources added.
Sources said that the neighbouring countries have high wheat prices as compared to Pakistan. "In India, wheat is being sold at Rs 25-30 per kg whereas in Bangladesh it is Rs 40-45 per kg against the local market prices of Pakistan that are around Rs 18-20 per kg," they said.