Govt suffers setback to import 1.5m MT wheat

  • 19-Sep-2020
  • Govt suffers setback to import 1.5m MT wheat

Amid a serious setback to a four-month-old plan to import 1.5 million metric tons of wheat due to refusal of Punjab to pay high price, the federal government on Wednesday once again “failed” to finalise the import modalities despite the soaring prices.

The Economic Coordination Committee (ECC), which took up the issue of shortage of wheat and subsequent increase in prices for the second time in the past three weeks could not find answer to many burning questions due to the superficial decision-making process.

The National Food Security Ministry moved yet another summary for the import of 1.5 million metric tons of wheat, which lacked details about demand, supply, stocks, local prices and financing details.

Instead of taking a firm decision about the import of the commodity, the ECC was turned into a debating club on Wednesday.

“A detailed discussion on the issue of wheat import was also held but could not be finalised due to the paucity of time”, according to a handout issued by the Ministry of Finance after the ECC meeting.

Chairman of ECC Dr Abdul Hafeez Shaikh decided that the issue being critical in nature would be further deliberated in a special meeting of the coordination committee to be held within the current week, it added.

The official data of the Pakistan Bureau of Statistics (PBS) showed over 2% increase in wheat prices in the past one week alone.

The wheat is being sold at Rs56 per kilogramme and wheat flour at around Rs68 per kg, according to the PBS.

Early last month, the federal cabinet had endorsed the ECC’s decision to allow the Trading Corporation of Pakistan (TCP) to import 1.5 million metric tons of wheat on behalf of PASSCO, Punjab and Khyber Pakhtunkhwa by waiving off all federal duties and taxes.

The provincial governments were contacted for obtaining their endorsement of demand, which included 500,000 metric tons for PASSCO, 700,000 metric tons for Punjab and 300,000 metric tons for K-P.

Only Sindh and K-P confirmed the purchase of imported 150,000 metric tons wheat, totaling 300,000 metric tons of the commodity, the ECC was informed.

However, Punjab requested that the imported wheat should be provided to it at Rs1,400 per 40 kg, which was not agreed by the finance ministry.

The officials said that Punjab had refused to procure wheat at imported rates on the ground that it was producing surplus commodity.

But the finance ministry too refused to pick the cost of subsidy and instead proposed last month to deduct the cost from the Punjab’s share in the National Finance Commission.

This was a serious setback to the plans to import 1.5 million metric tons of wheat.

Recently, the TCP awarded tenders of imported wheat for the quantity of 330,000 metric tons at the price of Rs42,554 per ton or Rs1702 per 40 kg.

The TCP gets 2% of the value of the import as commission to handle the transactions.

The ECC had already approved a summary to import 1.5 million metric tons of wheat on July 15.

But during the weekly National Price Monitoring Committee meeting, headed by the prime minister, the food ministry was directed to submit a new summary to the ECC for import of 1.5 million metric tons of the commodity.

During the ECC meeting, Planning Minister Asad Umar objected that the PM never gave such instructions.

The government was also in negotiations with Russia to import 200,000 metric tons of wheat on government-to-government basis to reduce the import time, bringing total quantity of imported wheat to an estimated 1.7 million metric tons.

The officials noted that someone had to pick the cost of imported wheat but neither Punjab nor the finance ministry was willing to do so.

Wheat prices that were Rs1500 per 40 kg in the market two years ago have now increased to Rs2,000 – showing a 33.3% increase in price, after the PTI government allowed export of 5.5 million metric tons of wheat and its products.

Similarly, the wheat flour price that was Rs900 per 20kg in August 2018 increased to Rs1,400 per 20 kg – a surge of Rs500 or 55.5% within two years.

The root cause of the dispute and subsequent delay in import was the cost of import of 1.5 million metric tons of wheat, which required Rs75 billion.

Another Rs22.5 billion are also required for picking the price differential between local and imported wheat.

During Wednesday’s meeting, Shaikh raised questions over the method of working out demand and supply projections and the food ministry’s one after another summary for the ECC to allow import of wheat.

He also pointed out that provinces should themselves import the wheat instead of relying on the federal government.

Special Assistant to the Prime Minister on Petroleum Nadeem Baber raised the point as to why the Punjab government did not allow the flour mills to procure wheat from the farmers this year, which aggravated the supply situation.

Other decisions

The ECC allowed the amendment in the import of Customs Duty Free Cars under disabled persons’ scheme.

Under the new amendments, the income bracket of the person who is importing the vehicle is increased from the current limit in the range of Rs20,000 to 100,000 and 100,000 to 200,000 per month.

The disabled person will also be allowed to import the vehicle, if he has not imported or purchased locally assembled car during the last 10 years under the scheme provided that he holds NTN certificate and files annual tax return.

The ECC also accorded approval for the provision of technical supplementary grant of Rs219.6 million for the reimbursement of the expenditure of National Coordination Committee on Covid-19 for the current financial year.

It sanctioned a supplementary grant of Rs6 billion for the Ministry of Railways to defray its mandatory liabilities including pay and pensions.

The financial affairs of the Ministry of Railways have gone bad to worse during the past two years.

The Publication of Rolling Spectrum Strategy 2020-2023 was also approved by the ECC.


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