Ban on wheat export to continue: ECC considers rise in prices as ''preposterous''

The Economic Coordination Committee (ECC) of the cabinet on Thursday decided not to lift ban on wheat export. The ECC also turned down Ministry of Commerce''s proposal seeking Research and Development(R&D) support to textile sector in future.
Presided over by Prime Minister Shaukat Aziz, the ECC took these important decisions after threadbare discussions. Dr Ashfaque Hasan Khan, Economic Advisor of the Finance Ministry, along with Managing Director, Utility Stores Corporation (USC) Hafeez Ahmad, briefed journalists that the ECC took serious notice of increase in wheat and wheat flour prices. This was considered "preposterous" at a time when Pakistan achieved the highest ever production of over 23.5 million tonnes.
Currently the total wheat stock with the government as on June 25 was 4.795 million tonnes. In addition, the private sector is holding over 2 million tonne.
He said wheat stock has never been so high in the country as it is today and therefore the ECC took serious notice of wheat and wheat flour price escalation.
"There will be no export of wheat under any circumstances and ban will continue for an indefinite period, therefore, hoarders should bring their stocks to the market as soon as possible to avoid further piling up of expenses on stocks," he quoted the ECC as saying.
He said that Commerce Ministry would issue a necessary SRO either today or tomorrow to notify ban on export of wheat.
Dr Ashfaque further said that R&D support issue dominated the meeting, but the ECC took strong exception to such proposals submitted by the Ministries of Commerce and Textile Industry and decided that in future no summary would be brought before the ECC.
He said that the ECC decided that R&D support to textile garments would continue to be 6 percent in 2007-08 rather 3 percent, which had been decided earlier. This would cost the nation Rs4 billion annually, he said.
However, the ECC deferred another proposal of Commerce Ministry in which it was asked that 6 percent R&D support should be extended to the leather garments.
"Commerce Ministry has been asked to do more work on the proposal and apprise the ECC what would be the responsibility of this sector," Dr Ashfaque added.
The ECC was of the view that the industry could not run on crutches indefinitely, he maintained. He said the Ministry of Textile Industry also proposed enhancement of R&D support from 3 percent to 6 percent on dyed/ printed fabrics, white home textiles and dyed/ printed home textiles, but it was also turned down.
However, the ECC decided to extend 3 per cent R&D for two more countries-Cambodia and Vietnam. Dr Ashfaque further said that the ECC reviewed Pakistan-Sri-Lanka Free Trade Agreement (FTA) for the first time and decided that Pakistan would remove tariff on herbal medicines, cosmetics, biscuits, confectionery and ceramic tiles, if Sri Lanka bans export of auto parts to Pakistan on a permanent basis.
Replying to a question, he said that auto parts would now be included in the negative list as a remedial measure.
Sri Lanka had also sought reduction in tariff on beetle leaf from 35 percent to 20 percent which has not been linked to a ban on Indian auto parts being re-routed through Colombo. The ECC also approved allocation of additional 125 mmcfd gas from Manzalai (NWFP) to SNGPL and 8 mmcfd Bobi field to SSGCL systems.
The ECC also decided to provide 40 mmcfd gas to KESC for setting up 220 MW thermal power station at Korangi Karachi. Dr Ashfaque said that the ECC also granted extension in LoIs to at least 8 power sector companies till December 2010, but he did not reply when these companies were given 14 cents per unit tariff or why this extension was given to them. He said that this question should be raised with the Ministry of Water and Power, which tabled the summary.
Dr Ashfaque said that the ECC reviewed the overall price situation in the country and was informed that overall inflation based on Sensitive Price Index. The ECC also reviewed the prices of cement and edible oil/ ghee in the country. The ECC was informed that the price of cement averaged Rs238 per 50-kg bag during the third week of June 2007.
However, according to press reports, the price of cement has declined in the range of Rs210 to 215 per 50-kg bag, which is the lowest in the last several years. The low price of cement has boosted construction activity in the country.
As regards edible oil the ECC was happy to note that international price of RBD Palm Olein has declined to $760 per tonne on June 21, 2007 as against the $869 per tonne only a few days ago. It is an encouraging sign because the price of RBD Palm Olein is on the decline in international market and therefore, Pakistani edible oils/ghee manufacturers should reflect the decline in their input prices in domestic price of edible oil/ghee.
The government will continue to monitor the developments in the international price of RBD Palm Olein and will ensure that the decline in the price of RBD Palm Olein are reflected in the domestic price of ghee and edible oil. The ECC was also informed that while ghee is being sold in the domestic market at Rs90 per kg, USC is selling ghee at Rs67 per kg - Rs23 per kg.
The ECC was also informed that there are 1000 USCs currently in the country and by end-July the number will reach 2,000; by September 15 to 3,500 and by end-November to 6,000. In addition, there are 380 franchise USCs in operation in various cities. The USC has established 22 warehouses in the country and 22 more will be established shortly. As a result of the activities sale of the USC has gone up in the range of 40-50 percent as compared to sale in the pre-budget period.
As promised in the federal budget 2007-08, the relief to the consumers provided through the USC is much more than what is stated in the budget 2007-08.
For example, Dal Chana is being sold at Rs38 per kg while it is being sold at Rs29 per kg in the USC, Dal Mash is sold at Rs72 per kg in the market while it is being sold at Rs57 in the USC. Similarly, Basmati rice is being sold at Rs65 per kg in the market while it is being sold at Rs45 per kg in the USC.
Furthermore, sugar is being sold at an average price of Rs 28.5 per kg in the market while USC is selling at Rs25 per kg. Last year sugar was selling at Rs38 per kg in the country and now it has come down to Rs28.5 per kg.