Pakistan will export a million tons of wheat and 200,000 tons of rice to Iran in exchange for fertiliser and iron ore under a barter system, a move aimed at enhancing bilateral trade between the two countries. Chief Executive Officer of the Harvest Tradings Ahmad Jawad talking to Business Recorder said that Pakistan had a surplus stock of two to three million tons of wheat, particularly in Punjab following a bumper season last year.
"Although prices of wheat in the international market are not as attractive as in the domestic market, exporting the surplus stock will save a hefty amount being spent on storage," he said. The barter trade, he said, would reduce the pressure on foreign exchange reserves, which were being spent on the import of fertiliser because of domestic shortage.
Pakistan's urea production capacity is estimated at 6.9 million tons - seventh largest in the world and enough to meet domestic requirements. The fertiliser industry had invested $2.3 billion over the past three years to enhance its production capacity. However, the shortage of gas - a vital input for fertiliser manufacturing - had brought production down by two million tons, increasing the import burden this winter. Jawad said Pakistan's rice was very popular in Iran. Iranian delegation wanted to take a trip to the storage facilities to examine the quality and specification of wheat.
Iranians had assured Pakistan that they would facilitate wheat exporters and simplify administrative procedures to improve trade connections between the two sides. Though traders, growers and manufactures of various products, especially agricultural goods, had welcomed the move to start barter trade, exporters were concerned with the involvement of governments on both sides. They thought that they were being sidelined.
Trade between government-run organisations of the two countries would affect the existing import and export businesses, they said. "The government should only facilitate and let the private sectors of the two countries start the trade on barter basis. Government-run organisations and their involvement in trade will create problems for businessmen," Jawad quoted some Iranians as saying.
He said that they had only started facing payment problems after the US moved to impose sanctions on Iran. "Governments on both sides should only ensure timely payments to exporters and importers, which without banking channels are not possible", he added.
Besides, trade through the new mechanism would affect the existing trade/business between private companies of the two countries. Islamabad was yet to finalise its plan to export a million tons of wheat and 200,000 tons of rice to Iran for oil and other goods under barter system. A committee has already been constituted comprising Minister for Water and Power, Minister for National Food Security and Research, Deputy Chairman Planning Commission, Secretary Commerce, Secretary Finance, Secretary National Food Security and Research and Managing Director Passco to explore possibilities in this regard.
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