Disposal of two million tons surplus wheat: government has not yet come up with viable strategy

The government has yet not come up with a viable strategy to dispose of 2 million tons of surplus wheat, lying with the Passco and Provincial Food Department. Sources in the Ministry of Food and Agriculture told Business Recorder that the matter came under discussion during the previous meeting of the Economic Co-ordination Committee (ECC) on July 2.
Government is making all out efforts to resolve the issue at the earliest and a meeting in this regard was convened again on Tuesday in the Ministry of Agriculture, but it was unable to reach any concrete decision, said secretary Ministry of Food and Agriculture when contacted by this scribe to get his comments. He added that another meeting is schedule for Wednesday.
The official said that the government decided to form a separate committee to review the wheat export issue and one of the options would be to supply wheat to the mills on subsidised rates, so that flour could be exported," the official said. Sources said that the committee expected to meet in a week's time to present the wheat export options has not met yet. They further said that if the government is exporting 2 million tons of wheat would have to give a subsidy of 150 dollar per ton, which means export of 2 million tons wheat will cost the government 300 millions dollar as wheat price in the international market is low at present.
The proposal of wheat export was previously rejected by the ECC on the basis of low global market prices, sources further added. Pakistan could export surplus wheat to Bangladesh, Egypt, Iran and Afghanistan, in case the government contacts each of these countries bilaterally, sources further stated.
Pakistan Flourmills Association has proposed to the government to export flour instead of wheat, as rates of Pakistan wheat are highest in the global market. Chairman Pakistan Flourmills Association Punjab Liaqat Ali Khan informed that wheat exporting countries are supplying the commodity to the international market in the range of 180 dollar to 220 dollar per ton, contrary to Pakistani rates ranging from 300 dollar to 350 dollar per ton inclusive transport charges. In his opinion the flour mills would earn billions especially in case of Punjab, if government gives 50 dollar to 60 dollar subsidy per ton of wheat to flour mills.
Khawaja Muhammad Shafiq a miller was of the view that four years ago Pakistan was annually exporting about 0.5 million tons of wheat products to Afghanistan, but after the wheat crisis of 2006 government banned wheat and flour export to Afghanistan. He said that the ban enhanced the wheat and flour smuggling across Pak-Afghan border, which also brought the flour mills on the verge of disaster. He requested the government to increase wheat by-products export from 0.2 million ton to 0.5 million ton.
In the year 2010 Pakistan anticipates to have a bumper wheat crop of 24 million tons against the set target of 25 million tons, depicting a decline of 4.0 percent. The government so far has procured 6.6 million tons of wheat against the set target of 7.5 million during 2010, whereas last year it procured 9.233 million tons.
Muhammad Amin Butt an official of the all Pakistan Flour Mills Association (PFMA) said that the export of wheat products was viable but the government should provide subsidy, adding that the recent move of the government to allow flour miller to export 0.2 million tons of wheat by-products to Afghanistan is in the right direction. Pakistan has accumulated a huge surplus of wheat after banning exports two years ago, but from the last two years Pakistani farmers are producing surplus wheat due to better wheat support price, Butt added. He said that the soaring stocks after a bumper harvest encouraged the government to say earlier this year that exports would eventually be allowed, but so far it failed in evolving any plan in this regard.
The official added that the government is considering a few options in this connection including export to Egypt and some other countries without inviting tenders. The government is also bearing the cost of storage of surplus wheat, but the country has no sufficient storage facilities, export of surplus wheat will rid the government of bearing storage costs, he added.