Importers not interested in importing duty-free wheat: ministry

The Ministry of National Food Security and Research Tuesday informed a parliamentary panel that importers are not interested in 0.3 million tons duty-free import of wheat owing to uncertainty in the market. Federal Secretary for National Food Security & Research Dr Muhammad Hashim Popalzai while briefing the Senate Standing Committee revealed that the government is considering increasing the support price for wheat to Rs 1,400 per 40-kg for the upcoming season against the current Rs 1,365.

Questionable reporting data, dollar-rupee parity making smuggling favorable and mismanagement at governments level were the major reasons behind the current wheat and flour crises, the Secretary said. However, the committee chairman Syed Muzaffar Hussain Shah stated that the ministry failed in identifying the reasons behind the creation of wheat and flour crises, fixing the responsibility as well as giving concrete recommendations to avoid such situations in future, said committee chairman.

The Secretary said that that crop reporting data is questionable and there is no independent system for the reporting. However, now they are trying to link it with Sparco which would help in improving data collection.

He said that government is considering increasing the support price for wheat around Rs 1,400 per 40-kg, but it will be announced near to the crop arrival, as it is feared to disrupt the market.

He further said tat importers are not interested to import 0.3 million tons of wheat due to uncertainty in the market despite waving off all duties and 5.5 percent withholding tax on the wheat imports. Importer of the view that prices may come down by the time wheat arrives in the country and they may not get profit.

Deputy Secretary Food Punjab said that wheat was exported @ $170 and would be imported @ $220 per tons. He further said that wheat price is around Rs 1,550-1,650 per 40 kg in the country against the support prices of Rs 1365 per 40 kg showing an increase of Rs 250. At such a high price, procurement would be very difficult in the coming season.

Popalzai said that 40,000 trucks of wheat per month were reportedly smuggled to Afghanistan as the dollar-rupee parity made the smuggling favorable. He said that stopping smuggling is too difficult as money is involved there. The government needs factoring-in the 0.7 million tones for Afghanistan in wheat targets to avert crisis in the country.

Secretary Food Khyber Pakhtunkhwa said that Punjab twice suspended wheat supply, ie, October 19, 2019 to November 1, 2019 and January 11, 2020 to January 22, 2020 which resulted in creating wheat and flour shortage in the province.

The committee raised questions that if over 0.9 million wheat is available in stock, what are the reasons for importing 0.3 million additional. The secretary said that wheat is being imported to avoid such crises in future as well as to maintain a strategic level of wheat availability in the country.

The committee was informed 24.479 million tons of wheat was produced in the country in 2018-19 and 0.163 million tons was exported by providing a subsidy of $155 per ton.

In November 2018 there were 9.85 million tons of wheat stocks said Popalzai, adding that Punjab sought permission for export of 0.2 million, Sindh 0.5 million and Passco 0.5 million of tons of wheat.

The government allowed export of 0.5 million tons but only Passco exported 0.163 million tons only. The reasons for exports were as provinces and Passco requested, huge wheat stocks of 9.858 million tons surplus, 3 years old wheat -chances of spoilage and bumper crop was expected in April-May 2019.

Torrential rains, hailstorm and other climatic factors in April 2019 destroyed a sizeable wheat crop of 1.2 million tons as reported, but the actual was more than that, he added. Further overall procurement was less by 35 percent of the target in 2018-19.

Government of Sindh did not procure even a single grain, said the Secretary, adding that the overall procurement as 4.034 million ton against the target of 6.250 million tons. The prices started to raise from July 2019 onwards, the ministry regularly appraised the ECC about the wheat situation in the country. Ministry after assessment of wheat crop reported to the ECC thrice in June 2019 to put a ban on the export of wheat. ECC put a ban on the export of wheat on July 24, 2019. Soaring wheat prices, Ministry requested to convene a meeting of National Pricing Monitory Committee at different official forums but was not called for two and a half months.

On October 2, 2019, three provinces and utilities were given wheat from Passco due to the rising price of wheat flour. The biggest increase in wheat prices was in Sindh, however wheat purchased by Sindh is less than two to three lakh tons, said Secretary adding that NAB is inquiring about the matter.

The committee directed the concerned departments of federal and provincial governments to come into the next meeting with reasons behind the crises, people involved and recommendations to avoid such situation in future. The committee also directed Federal Investigation Agency (FIA) in the next meeting.