Wheat import: Food ministry waits for input on duty increase proposal

Will send a summary for ECC’s approval to protect domestic produce

ISLAMABAD: The Ministry of Commerce and Ministry of Finance have yet to give their response to the proposal of enhancing the regulatory duty on wheat import from the current 40% to 60% floated by the Ministry of National Food Security and Research.

Last week, the food security ministry wrote letters to the commerce and finance ministries, seeking comments on the proposal of further increasing the regulatory duty on wheat import in a bid to discourage the inflow of cheap commodity, particularly from Kazakhstan, and to protect the domestic produce.

However, a food security ministry official told The Express Tribune that they were waiting for the input of the two ministries before preparing a summary for approval of the Economic Coordination Committee.

The food security ministry is concerned about the surplus wheat stock in the country due to high prices and fears that import of the commodity, particularly from the Central Asian countries, will further aggravate matters.

Earlier this year, the regulatory duty on wheat import was increased from 25% to 40%.

In order to reduce the surplus, the government had announced an encouraging subsidy on wheat export, but international buyers were reticent because of lower prices in the world market.

It is unlikely that the government will offer more subsidy on exports. “Therefore, it is seeking to push up the regulatory duty on imports by a further 20% to shield the local produce,” the ministry official added.

Under the World Trade Organization (WTO) regime, a country cannot ban the import of any commodity and regulatory duty is the only choice to protect a local product. Pakistan has had surplus wheat and has undertaken various steps lately to dispose of the stock by exporting it to the international market. However, all efforts have so far proved fruitless because of weaker prices.

At present, Pakistan has a stock of 9.923 million tons with provinces and Pakistan Agriculture Storage and Services Corporation (Passco).

The ECC in January 2015 had allowed export of 800,000 tons of wheat by the government of Punjab at a rebate of $55 per ton and 400,000 tons by the government of Sindh at a rebate of $45 per ton. Later, the subsidy was increased by $30.

Until now, Punjab and Sindh could export only 252,650 tons and 164,000 tons, respectively.

Published in The Express Tribune, August 23^rd, 2016.

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