ECC rejects proposal for ban on wheat export

It is believed the restriction may not stop smuggling to Afghanistan

ISLAMABAD: The federal government on Wednesday did not approve a proposal for ban on wheat export due to apprehensions that the measure may not stop outward flow of the staple owing to its smuggling to Afghanistan.

The Ministry of National Food Security and Research had requested the Economic Coordination Committee (ECC) of the cabinet to ban the export of wheat due to nearly 32% reduction in its stock. Headed by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh, the ECC referred the matter to the Price Coordination Committee.

The ECC allowed the Port Qasim Authority (PQA) to hire a legal consultant on “negotiated terms” with relaxation in Public Procurement Regulatory Authority (PPRA) rules. The rules have been relaxed to expedite the process of constructing the third liquefied natural gas (LNG) terminal.

The ECC was informed that as of June 28, the wheat reserves stood at 7.775 million tons as against 11.37 million tons at the same time last year, showing a reduction of 31.8%.

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Railways Minister Sheikh Rasheed Ahmed backed the proposal while other members were of the opinion that the ban may not address the issue due to growing smuggling of wheat and its products to Afghanistan.

The country has produced 24.12 million tons of wheat against the target of 25.5 million tons from an area of 8.833 million hectares during the Rabi season 2018-19. Heavy rains coupled with hailstorms affected wheat crop in the country.

Owing to cash-flow problems, the Pakistan Agriculture Storage and Services Corporation (Passco) and provincial governments have not been able to pick stocks from farmers, according to the officials.

Passco and the four provinces have so far procured only four million tons of wheat against the target of 6.25 million tons, according to the Ministry of National Food Security and Research.

Against the 1.1-million-ton procurement target, Passco procured 670,000 tons of wheat. Punjab procured 3.3 million tons against the target of four million tons. Sindh did not procure any quantity against the target of 750,000 tons. Khyber-Pakhtunkhwa (K-P) procured only 37,000 tons against the target of 300,000 tons and Balochistan also did not procure wheat against the target of 100,000 tons.

There were also apprehensions that the farmers were hoarding the commodity in anticipation of increase in prices. Neither the federal nor provincial governments have any mechanism to check hoarding and profiteering after the end of magistracy system.

In the past one year, Pakistan exported 5.15 million tons of wheat and wheat flour. This included 3.27 million tons of wheat and 1.87 million tons of wheat products. The country earned export proceeds that the government did not want to forego.

However, some ECC members expressed concern that if the trend continued, Pakistan may have to import wheat after three to four months.

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Pakistan exported one million tons of wheat to Indonesia, 424,500 tons to Malaysia and 370,000 tons to Afghanistan, which also imported 84,235 tons of wheat products from Pakistan.

But the quantum of smuggling is said to be far higher than formal exports to Afghanistan.

The Petroleum Division briefed the ECC about the utilisation of railway services for the transportation of petroleum products to upper areas of the country. In order to enhance the supply of PSO products to Pakistan Railways, the committee directed the Petroleum Division to transfer surplus business to Pakistan Railways that offers lowest freight charges as compared to other modes of transportation. The ECC allowed the Ministry of Maritime Affairs to hire a legal consultant with relaxation in PPRA rules.

While giving a presentation to the ECC, the Ministry of Maritime Affairs emphasised the urgency of establishing the third LNG terminal at Port Qasim so as to overcome gas shortage in the country in the years ahead. The third terminal is to become operational before November next year aimed at meeting gas needs that are expected to grow further next year due to the fall in domestic production.

In order to expedite the process of establishing the third LNG terminal, the committee approved resolutions of the PQA board by exempting the authority from public tendering for appointment of legal consultants through negotiated tendering, according to an official statement of the finance ministry.

The ECC also approved the resolution of the board that allowed amendments to the PQA master plan to accommodate the prospective third LNG terminal. The ECC in its decision, in February 2019, had directed the Ministry of Maritime Affairs to expeditiously work on setting up an additional LNG terminal.

Published in The Express Tribune, July 4^th, 2019.

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