The delayed decision of the federal government to allow unlimited wheat export is unlikely to bear fruit as domestic and international wheat prices are almost the same. Consequently no private party is likely to be interested in wheat export trade, as the present international price is about $290 per ton, translating into local rate of Rs 998 per 40-kg.
The Punjab government had written to the federal government in August 2010 to allow wheat exports but the federal government's procrastination led to much lower earnings of wheat exports. Sources in the ministry of Food and Agriculture (MinFa) told Business Recorder that if the decision of export had been taken in September when international rate was nearly $350 per ton, the government could have earned around $800 million dollars by exporting 2 million tons of wheat. At current rate of $290 per ton it will earn 580 million dollars and as a result Pakistan would loss about $220 million due to delayed decision, they said.
Pakistan, Asia's third-largest wheat producer, deferred plans in August to export 2 million tons of surplus wheat as devastating floods washed away about 0.725 million tons of the grain, which also raised concerns about next year's crop. According to traders, despite damages from floods, Pakistan still has surplus wheat for export as stocks soared this year after a bumper crop of 23.86 million tons in 2009-10, with a carryover of 4.2 million tons from the previous crop.
This year the government has set an ambitious target of 25 million tons of wheat for 2010-11 despite considerable damage to farmland in Punjab and in Sindh. There is no space to stock the next wheat crop due in April next year, as over 3 million tons of wheat is already lying under open skies across the country.
Taking to Business Recorder, Pak-India Flourmills Confederation Chairman Dr Bilal Soofi observed that India has a surplus stock of 55 million tons of wheat and it successfully exported half of its stocks through spot exchange. He said that current stocks of wheat are 8.6 million tons, while country needs only 3.1 million tons for the next 110 days when the new crop will arrive in the open market.
Commenting on the issue, Additional Secretary Ministry of Food and Agriculture, Babar Yaqoob said that it is hoped that the upcoming wheat crop would be a bumper crop and if the government fails to export the already surplus wheat stock, there will be no space left in godowns for the upcoming wheat crop. He said that a huge quantity of wheat has been damaged as it was kept under the open sky due to lack of storage facilities, therefore Pakistan should export wheat, as at international level wheat prices are quite high.
On a question he said that the first priority should be given to local people and then the spare production should be exported, he said. He further said that government by itself would not export wheat instead it has permitted private sector to export it, adding the government will not provide any sort of subsidies on wheat export. He said that the export decision must be lauded, as export is still profitable. Pakistan Agri Forum Chairman Ibrahim Mughal said that international price keeps on fluctuating, and wheat price may go up again.
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