ECC allows import of more wheat

Approves purchase of 640,000 tons at cost of up to $284 per ton

ISLAMABAD:

The federal government on Thursday approved the import of another 640,000 tons of wheat at a cost of up to $284 per ton, about 2% higher than the last bid price, largely bridging the consumption shortfall.

This included 340,000 tons of wheat that has been arranged through competitive bidding at $284 per ton and another 300,000 tons under a government-to-government deal with Russia at $282.5 per ton. The Economic Coordination Committee (ECC) of the cabinet cleared both proposals for the import of wheat.

Headed by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh, the ECC approved the lowest price of $284 per ton that had been offered by GTCS Trading for a total quantity of 120,000 tons. After price matching, the total quantity would be 340,000 tons, according to the Ministry of Finance.

The price offered by GTCS was 2% or $5.5 higher than the last bid price offered by Aston Industrial Agro, Russia on September 26, which was $278.5 per ton, for the import of 330,000 tons of wheat.

But as compared to the first tender issued on August 7, the fresh bid was $50 or 21.5% higher, indicating a constant increase in commodity prices in the international market.

The expected landed cost of imported wheat in Karachi would be Rs49.8 per kg or Rs1,992.1 per 40 kg. The imported wheat would be equally distributed among Pakistan Agricultural Storage and Services Corporation (Passco), Punjab and Khyber-Pakhtunkhwa.

Against the minimum support price of Rs1,400 per 40 kg, wheat is available at Rs2,200 to Rs2,400 in the domestic market. The government is also considering a proposal to set the minimum support price at Rs1,745 per 40 kg for the next crop.

The fifth import tender was issued on October 9 and it was opened on Wednesday. Six parties participated in the bidding process.

The ECC also granted, in principle, approval for the import of wheat from Russia by the Trading Corporation of Pakistan (TCP), for which a detailed summary regarding fresh offer from the Russian government would be presented to the ECC for approval, according to the finance ministry.

On October 14, the Russian Federation offered an additional quantity of 300,000 tons of wheat at a concessionary rate of $282.5 per ton, according to the Ministry of National Food Security. The ECC also approved the proposal in principle. Russian shipments will be made in November and December.

Additionally, Russia has offered another 300,000 tons of wheat but the price was not conveyed till Wednesday. The ECC will consider this offer next week once the TCP receives the final bid price from Russia under a government-to-government deal.

The federal cabinet has allowed the TCP to import wheat on behalf of Passco, Punjab and K-P governments by waiving duties and taxes. Owing to government’s mismanagement, prices of wheat and its products are constantly rising.

TCP has so far floated five tenders, out of which it has finalised three import deals of one million tons at $233.8 per ton, $278.5 per ton and $284 per ton.

In addition to the five tenders, the ECC has already allowed import of 180,000 tons of wheat from Russia under a government deal at $279 per ton and granted another, in principle, approval for 300,000 tons at $282.5 per ton.

So far, the TCP has ensured import of nearly 1.5 million tons out of the total of 1.8 million tons and the remaining about 320,000 tons are to be imported till January next year, according to the food ministry’s summary.

Wheat prices increased due to 1.5 million tons less production this year, which is being bridged through import of 2.75 million tons, said Hafeez Shaikh on Thursday. He said that the government would increase its reserves by one million tons.

The government was also giving subsidies to keep prices of wheat flour low, he added.

The food ministry briefed the ECC that so far 570,000 tons of imported wheat had reached Pakistan. It said that the TCP had provided a schedule of 29 vessels that would arrive till January 2021, bringing 1.5 million tons of wheat in the country.

The ministry assured the ECC that they had been making their best efforts to overcome any future shortage of wheat in the country.

Published in The Express Tribune, October 16^th, 2020.

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