Call for wheat export

The recent wheat import scandal has brought into focus the need for a comprehensive strategy to manage Pakistan’s wheat supply. The country currently finds itself in a situation where there is a surplus of 3.9 million tonnes of wheat, almost entirely due to the caretaker government’s controversial decision to allow imports of almost the same amount — 3.536 million tonnes — from Russia and Ukraine between September 2023 and April this year at higher-than-average prices. Not only were the imports unnecessary, they depressed the prices of locally-grown wheat, while leaving consumer prices relatively high, as mill owners and importers refused to sell at a loss.

Now, the Cereal Association of Pakistan (CAP) trade group is demanding permission to export some surplus wheat. The government would be well advised to go along with the proposal, as long as it maintains healthy stocks to ensure that domestic prices remain stable. The trade group says exporting 500,000 tonnes of wheat would yield $140 million, and refined flour and other wheat products would be even more profitable. This is easy money on the table, as long as export contracts and government stocks are carefully managed. The government would need to ensure that Pakistan is only importing wheat when necessary to shore up reserves or take advantage of low international prices, and conversely, exports would need to be limited to surplus output, well beyond the reserves level required to ensure stability in domestic prices.

Otherwise, short-sighted decisions to export without considering local and international factors will invariably end up costing citizens and the government, while still yielding a pretty profit for exporters. It is worth noting that even $140 million estimate represents a massive loss on the average price paid for the imported wheat, yet punishments for the fiasco have been limited to a few less influential government officials being suspended, with no sign that any big fish will face any consequences.