Wheat procurement: PFD credits Rs 21 billion to Food Account ensuring timely retirement

After selling 827,397 metric tons of wheat to the exporters during the last three months, the Punjab Food Department (PFD) has credited Rs 21 billion to the Food Account and thus ensuring timely retirement of loans taken for wheat procurement in the past.
Sources in the provincial food department told Business Recorder here on Monday that at the closing of last year's procurement, the Food Department stocked a quantity of 6.6 million metric tons of wheat in July 2010. Only 2.8 million metric (MMT) tons was expected to be sold to the flour mills during the current year's release as per five years average, leaving a huge balance of 3.8 MMT.
The Punjab Government took up the matter with the Federal Government to allow the export of wheat in March 2010. On 21 December 2010, Federal Government allowed export of wheat and the Food Directorate made extensive negotiations with all the stakeholders especially, the potential exporters and devised a comprehensive strategy, frame work and Operational System for export of wheat through private sector.
Sources said that the first agreement of export of 100,000 metric tons of wheat was signed by the Food Department and a Karachi based exporter on January 3, 2011. Since then there was no looking back. The department during three months period sold 827,397 metric tons of wheat to the exporters while during the four years ie 2001, 2002, 2003 and 2006, Food Department accumulatively sold 801,112 metric tons of wheat for export, the sources added.
The sources claimed to attract serious buyers a transparent and speedy system was put in place which not only eliminated conformance costs if any but also provided a corporate conducive environment for business and trade. This aspect has duly been acknowledged and appreciated by the firms, who worked with the Food Department.
It is imperative to point out here that majority of the firms were based in Karachi, but due to prompt, speedy and un-hurdled export operations, they switched on their business with Punjab Food Department instead of Sindh Food Department, from where they were paying less transportation charges, Rs 25 less per maund of wheat purchased and no stringent financial requirements like LC for credit, which incurs another Rs 25 per maunds extra cost. In addition to this, another advantage of Sindh over Punjab was long-term relationship between the Sindh Food and Karachi based exporters that needed to be matched by the Punjab Food Directorate.
To overcome such handicap, the Punjab Food arranged standard form of Agreement for export, standard In land letter of credit for 45 Days with deferred payment, Standard Options/packages to opt for based on quantity for export, setting up of Information Cell at Lahore and holding meetings with exporters at Karachi besides extending a Rs 25 per maund rebate incentive as sharing of transportation charges and number of other incentives, the sources concluded.