Govt considering shutting down PASSCO

Procurement agency will have little role after creation of free wheat market

ISLAMABAD:

The government is mulling over winding up Pakistan Agricultural Storage and Services Corporation (Passco) as its role in wheat procurement will come to an end after the proposed creation of a free market.

Additionally, the government has decided to draw up a policy on sugarcane crushing and sugar exports.

Sources told The Express Tribune that the Economic Coordination Committee (ECC), in a recent meeting, directed the Ministry of National Food Security and Research to present a wheat policy along with proposals for shutting down Passco.

Passco undertakes the procurement of wheat and other agricultural commodities and implements the government's support price policy for wheat, paddy, gram, potato, onion and other specified crops.

In the meeting, a case was tabled before the economic decision-making body, where it was highlighted that the government imported wheat during 2021 and 2022 but Khyber-Pakhtunkhwa (K-P), Pakistan Navy and Gilgit-Baltistan along with different agencies refused to lift the commodity.

Owing to their reluctance, the federal government was compelled to bear a liability of Rs87 billion. It prompted the government to consider deregulating wheat procurement and winding up Passco, officials said.

The ECC also directed the Ministry of National Food Security to devise a policy on sugarcane crop in consultation with different stakeholders and present its terms of reference in next meeting of the committee.

The Industries and Production Division pointed out that the ECC, while considering a summary, had approved export of 150,000 metric tons of sugar.

The cabinet ratified the decision subject to the condition that the provincial cane commissioners would allocate export quota within seven days of the issuance of requisite notification by the Ministry of Commerce, based on stocks available as on June 5, 2024.

Consequently, the quota for K-P sugar mills was calculated at 6% of the total stock, ie, 9,000 metric tons. However, the provincial cane commissioner did not distribute the export quota among mills. In that regard, the ministry sent a request to the K-P chief secretary via letter dated August 9.

In response, the K-P Food Department, through its letter dated September 19, argued that the provincial cabinet, in its meeting held on July 12, had decided to permit sugar export to the operating mills in the province.

However, the decision would take effect only after the start of the upcoming sugarcane crushing season and would be based on the quantity of sugarcane crushed by each mill.

Subsequently, the K-P mills filed a writ petition in the Peshawar High Court, seeking directives to the provincial government for the immediate issuance of export quota in compliance with the federal cabinet's decision.

The K-P Food Department said that the high court gave its judgement on August 27, 2024. A substantive part of paragraph 11 of the judgement says:

"As the whole record of previous meetings (of the board) was not before us and the matter essentially relates to facts, we, therefore, deem it appropriate to refrain from interpreting the relevant constitutional provisions related to the relationship between the federation and provinces, particularly in relation to the latter's constitutional obligations. In our view, the justice of the case demands that the ECC reconsider the issue in contention with the K-P government and reach a decision it deems fit, as per its mandate, within two weeks."

It was informed that the K-P Food Department contended in its letter that sugar production in the province during the 2023-24 crushing season stood at 0.448 million metric tons against the requirement of 0.979 tons, resulting in a shortfall of 54%.

Keeping that in view, they expressed concern that sugar export might adversely affect the commodity's supply, availability and price within the province. They requested that the provincial cabinet's decision, as reflected in paragraph two of the summary, be placed before the ECC for consideration in line with the Peshawar High Court's order.

The ministry pointed out that the Sugar Advisory Board took the decision on exports with the consensus of all stakeholders, including the K-P cane commissioner, because of surplus stocks across Pakistan.

Moreover, the deficit in K-P was typically met through sugar supplied by provinces having a surplus, such as Punjab and Sindh, as the sweetener's trade was allowed freely among provinces. Therefore, no shortage was expected in the province due to current or any future exports.

During discussion, the ECC observed that the federal government may consider K-P's request, which did not intend to export sugar due to concerns about potential shortage.