Cabinet split over wheat import plan

Some members suggest buying commodity from domestic market

ISLAMABAD:

Cabinet members were divided over the import of wheat as some called for procuring commodity from the domestic market by shelving the import plan.

In a recent meeting of the cabinet, Prime Minister Shehbaz Sharif noted that prices of wheat were on a downtrend in the international market. He emphasised that deals should be finalised at more competitive prices to save foreign currency reserves.

However, some cabinet members suggested that instead of importing one million tons of wheat, the staple commodity may be procured from the domestic market at rates higher than the support price.

Most of the cabinet members expressed their reservations about the proposal on the ground that such a move would set a wrong precedent and would be detrimental to the state’s policy in the coming years and also could provide an incentive for hoarding the commodity.

The country has seen the formation of a cartel in wheat trade due to the monopoly of traders. During the tenure of previous Pakistan Tehreek-e-Insaf (PTI) government, sugar and wheat cartels made billions of rupees by taking benefit of black market and through hoarding the commodities.

That was why the cabinet members opposed the proposal of buying wheat from the local market at rates higher than the
support price.

The government was facing a dilemma as if it imported one million tons of wheat from the international market, it would put a burden on the foreign currency reserves. On the other hand, if it decided to procure wheat from the local market, the traders and hoarders would emerge as big beneficiaries of
the proposal.

PM Shehbaz gave directive that a committee comprising ministers for commerce, national food security, industries and production, and finance should comprehensively examine the matter including the actual requirement of wheat import and present its recommendations to the next cabinet meeting
for consideration.

Keeping in view the falling wheat prices in the international market, the Ministry of National Food Security and Research recommended the approval of the lowest bid of Cargill International/ Cargill Agro Foods Pakistan, which offered a price of $439.40 per ton for supply of 110,000 tons of wheat.

A matching quantity restricted to the extent of 500,000 tons of imported, specified wheat was allowed to be procured after negotiations with the
participating bidders.

The ministry directed relevant officials to issue another tender for 500,000 tons and include the options of on-site payment and 90-day deferred payment.

Earlier, the Ministry of National Food Security was directed to take up the matter with the Russian government to finalise pending issues with a view to concluding the negotiations/ arrangement by July 20.

In the first week of July, the Economic Coordination Committee (ECC) approved the import of 500,000 tons of wheat at a price of
Rs103 per kg.

It approved the lowest bid of Cargill International/ Cargill Agro Foods Pakistan that quoted a price of $439.4 per ton for 110,000 tons to a total of 500,000 tons of wheat import, according to the Ministry of Finance. The total contract price came in at $220 million.

The ECC also asked the Ministry of National Food Security to explore the possibility of wheat import on three-month deferred payments due to external sector constraints.

Earlier, Pakistan imported 500,000 tons of wheat at $515.4 per ton, bringing the total contract price to $258 million.

Published in The Express Tribune, July 26^th, 2022.

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