LAHORE – The government will have to lower wheat prices to dispose of last year’s carry-over stock because the next year’s bumper crop will increase the total commodity stock to 5 million tons, which could create storage problems in Punjab province.
Industry experts said the government should divert agriculture relief package of Rs341 billion to provide subsidies to farmers on agri inputs and lower the rate of wheat. In the last export policy, there was restriction of minimum 5,000 tons of export and only big exporters were eligible to export wheat, who misused the rebate facility.
Industry experts said that due to higher stocks of wheat and lower international prices of the commodity, Pakistan needs to make concerted efforts to export surplus wheat stock in order to create physical and fiscal space for the new crop procurement. A small quantity of surplus wheat could be exported by the private sector despite attractive rebate on export.
Dr Bilal Sufi, chairman of Standing Committee on Wheat and Flour FPCCI, suggested the govt not to accept the demands of mafia to extend rebate policy on export as it has already proved to be useless.
The wheat continued to be purchased from the food department and sold in the local market whereas rebate was applied for on fake documents.
He said this practice not only caused damage to wheat export but also rendering 95 percent of flour mills as scrap which remained unable to purchase costly wheat. Bilal Sufi said that Food department released wheat to exporters at around Rs1120 per 40 kg (after payment of rebate) which was hurting national exchequer.
If minimum limit for export is removed along with announcing new price of wheat at around Rs1200 the Punjab wheat will be lifted in full speed by the mills as well as the small and big exporters, he suggested.
He further said that the wheat export policy was widely misused by big exporters, as wheat was purchased from food department and sold in the local market and rebate was collected on fake documents.
He said that that government wheat export policy could not be fruitful despite announcement of huge rebate for the exporters, as Punjab could export maximum of 150,000 tons with surplus stock of around 1.8 million tons only in single province.
Due to surplus wheat Punjab was given target of exporting 0.8 million tons of wheat while Sindh was to export 0.4 million tons and both federal as well as provincial governments announced rebate to attract exporters. First announcement of export was made in March 2015 and period of export was expanded four times but export target was not achieved.
The country could succeed to export around 0.5-0.6 million tons of wheat to Afghanistan annually when the rate was at Rs1200 per ton locally. And now, despite announcement of $90 rebate on each ton, export target was not achieved mainly due to high price of commodity.
It is to be noted that the Pakistan Flour Mills Association had demanded of the government to extend the period of special rebate package for the export of flour instead of surplus wheat that expired on 30th September 2015.
PFMA’s central committee chairman Muhammad Naeem Butt said that in view of the low prices of wheat in the international market Pakistan is unable to register high growth in wheat export.
He said that owing to expiry of rebate package period and tedious export procedures Pakistan’s, export of flour to Afghanistan had been interrupted for past three months.
News source: The Nation