Barter trade: Pakistan to export 1m tons of wheat to Iran

Will also ship rice and import fertiliser, iron ore.

ISLAMABAD: Under a barter system, Pakistan will export one million tons of wheat and 200,000 tons of rice to Iran in exchange for fertiliser and iron ore, in a move aimed at enhancing bilateral trade in the face of US sanctions against Tehran.

This was decided in a meeting between Federal Water and Power Minister Syed Naveed Qamar and visiting Iranian Deputy Commerce Minister Abbas Ghobadi here on Friday. Trading Corporation of Pakistan (TCP) chairman and Pakistan Agricultural Storage and Supplies Corporation (Passco) managing director were also present.

The meeting came following a decision on trade expansion taken by President Asif Ali Zardari and his Iranian counterpart Mahmoud Ahmadinejad in Islamabad last week.

Pakistan has a surplus stock of two to three million tons of wheat, particularly with Punjab – the major producing area – following a bumper season.

“Though prices of wheat in the international market are not as attractive right now compared to the domestic market, it will be better to export the surplus stock which will save a hefty amount being spent on storage,” a government official said.

“The barter trade will lessen the pressure on foreign exchange reserves which are being spent on import of fertiliser due to domestic shortage,” the official said.

Pakistan’s urea production capacity is estimated at 6.9 million tons – seventh largest in the world and enough to meet domestic requirements. The fertiliser industry has invested $2.3 billion over the last three years to enhance production capacity.

However, shortage of gas – a vital input for fertiliser manufacturing – has brought down production by two million tons, increasing the import burden this winter.

According to a statement issued after the meeting, Naveed Qamar asked Passco Managing Director Major General (retd) Sohail Shafkat to hold talks with the visiting Iranian minister and finalise details for the export of wheat. In the meeting, Passco will present samples of wheat to the Iranian delegation for examination.

Abbas Ghobadi said Pakistan’s rice was very popular in Iran and was cooked in every festival and special occasion. He expressed the desire that the Iranian delegation wanted to take a trip to the storage facilities to examine the quality and specification of wheat.

He also assured Pakistan that Iran would facilitate wheat exporters and simplify administrative procedures in order to improve trade connections between the two sides.

Published in The Express Tribune, February 25^th, 2012.