ISLAMABAD: The National Assembly Standing Committee on Commerce Monday directed the Ministry of National Food Security and Research to immediately firm up the wheat policy within one week.
These directions were issued by the committee presided over by Syed Naveed Qamar after detailed discussion on wheat prices, its availability, and next year's prospects.
Standing Committee members discussed the woes of farmers; one member suggested that minimum support price for wheat should be fixed at Rs 2200 per 40 kg.
Sharing the details about import of wheat, Chairman Trading Corporation of Pakistan (TCP) Riaz Memon informed the committee that TCP has scrapped two tenders due to high prices offered by the importers.
He stated that the Federal Cabinet approved import of 1.5 million MT of wheat by TCP on the recommendation of Ministry of National Food Security and Research to meet demand in the country, of which 700,000 MT would be provided to the Government of Punjab, followed by 500,000 MT to PASSCO, and 300,000 MT to the Government of Khyber Pakhtunkhwa.
TCP has so far awarded contracts for import of 330,000 MT of wheat at $ 233.85 per MT. A quantity of 220,000 MT will arrive in October 2020 and 110,000 MT is expected to arrive in January 2021. Tender floated by TCP for import of wheat on September 15, 2020 was scrapped due to high rates. The lowest quoted bid was $ 274 per MT. The TCP floated a tender for import of 300,000 MT of wheat on 18/09/2020, which opened on September 23, but has been scrapped.
He said TCP floated first's tender of 1.5 MMT of wheat slightly pushed up the price in the international market but luckily TCP got a good price against 330,000 MT of imported wheat. Second international tender was of 170,000 MT. The lowest offer was of $ 274 PMT which was scrapped because it was higher than the market price and TCP was informed that the tender was on the higher side due to which it was scrapped.
Naveed Qamar questioned if TCP could cancel the tender arbitrarily, saying that he understands that NAB is very active. However, he suggested a basket for buying imported wheat through tenders. Chairman TCP endorsed to the viewpoint of Naveed Qamar saying "this was exactly what happened."
He said that TCP received a price offer of $ 280.90 PMT for the next tender which was difficult to approve as the price offer of $274 was scrapped. The organization has now floated a fourth tender.
Chairman TCP stated that when the Economic Coordination Committee (ECC) of the Cabinet, in its statement, mentioned that Pakistan will import a huge quantity of wheat, international prices shoot up. He added that international prices are coming down and a deal is under negotiation between Pakistan and Russia on G2G basis.
He further stated that TCP has been engaged in import of wheat at a very late stage as agreements with provinces were delayed and Punjab government communicated its demand on September 19, 2020. However, it is a very challenging job for the TCP, he maintained, adding that TCP will try to ask the private sector to supply wheat on FOB basis.
An Additional Secretary of Ministry of National Food Security and Research said that the Ministry has prepared a MoU for a deal on wheat with Russia, which is being tabled in the cabinet. He said procurement target was short of 1.5 MMT due to 50 per cent reduction in yield in KP. He maintained that 1.5 MMT of wheat will be imported by January next year whereas 0.8 MMT of wheat will arrive by the end of next month.
Naveed Qamar said that the government has created a gap by not taking timely decisions. He said that the government ensures that wheat cargoes should arrive on time otherwise speculations are fuelled in the market due to shortage of commodities.
Qamar questioned reserves being built on imported wheat and stated that this year wheat crisis will be deeper than in the previous year.
"Government should build strategic reserves by offering incentives to the growers," he said questioning why farmers of other countries are being incentivised.
Naveed Qamar said that there would be a crisis in cities and at the same time farmers will also complain due to low price of their commodity. He said, basic issue is timely arrival of imported wheat.
In reply to a question, Additional Secretary, Ministry of National Food Security and Research stated that wheat was being smuggled in very low quantities because of Corona.
One of the members of the committee said that apparently there is a cartel in import of wheat as only two parties, ie, Mikri Group and Chappal Group have imported large quantities of wheat. Chairman Standing Committee endorsed this viewpoint.
According to an official statement, Chairman pointed out some serious mismanagements in prior planning of wheat imports, causing not only shortage of wheat in the country but also huge hike in price of floor. Syed Naveed Qamar directed the Ministry of Food Security to take immediate steps to address the perception of shortage of wheat in the coming months.
The Committee observed that the price of wheat in the market is higher than the imported rate or landed price. The Committee also observed that benefit of subsidy is going to foreign farmers in shape of import of wheat at higher rates.
The Committee demanded the Government to fix support price of wheat and announce maximum incentives to local growers to get rid of wheat crisis. The Chair directed the Ministry of Food Security & Research and Trade Corporation of Pakistan (TCP) to update the Committee on all the measure taken to address the wheat crisis and communicate the plan before the committee in 7 days.
Copyright Business Recorder, 2020
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