President intervenes: Pakistan, Iran break deadlock over barter trade

Tehran will import wheat after quality check, supply fertiliser in exchange.


Zafar Bhutta July 19, 2012

ISLAMABAD:


Pakistan and Iran have broken the deadlock over barter trade as they have reached an understanding about export of wheat to Tehran following the intervention of President Asif Ali Zardari.


A high-level delegation, headed by Food Security and Research Minister Mir Israrullah Zehri who held talks with Iranian authorities in Tehran recently, has returned after successful negotiations. They have resolved issues related to quality and pricing, which became a major stumbling block in pressing ahead with plans to initiate barter trade, say sources.

Zehri handed over a letter of President Zardari to Iranian authorities, which called for resolving the issue of wheat import under barter trade, sources said.

Earlier, Iran had expressed dissatisfaction over quality of Pakistan’s wheat, which contained 0.3% karnal bunt (a fungal disease) as Tehran sought a commodity free of fungus.

During the talks, Pakistan’s team insisted that 0.3% karnal bunt was not harmful to human health. They pointed out that the internationally acceptable level was even higher at 1% and said Pakistan’s wheat was in line with standards applied in the United States and Europe.

Later, Iran softened its stance and reached an understanding about the import of wheat. The two sides had set the criteria and an Iranian team would conduct tests to check the quality of wheat, said officials of the food security and research ministry.

A mechanism for transporting wheat to Iran also came up for discussion. The two countries agreed that Iranian officials would check the quality of wheat at the Karachi Port before shipment.

According to the understanding reached, Pakistan will sell wheat at the price prevailing in the international market in July, though prices are going up. Three months ago, the two sides had set the price at $275 per ton, which was valid for two weeks only.

Earlier, talks on barter trade had deadlocked over Iran’s insistence on cash payment for urea supply to Pakistan and refusal to import wheat. “Now, Iran will export fertiliser in exchange for wheat import,” a government official said.

In February, then water and power minister Syed Naveed Qamar and visiting Iranian Deputy Commerce Minister Abbas Ghohadi had agreed that Tehran would import one million tons of wheat as well as 200,000 tons of rice. They also decided that wheat imports would start in two months.

In return, Pakistan would purchase iron ore from Iran for state-owned Pakistan Steel Mills, a financially-troubled industrial giant because of acute shortage of raw material and other problems. Pakistan also agreed to import fertiliser to meet domestic demand and arrest rising prices.

Published in The Express Tribune, July 20th, 2012.

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COMMENTS (14)

Selina Markham | 7 years ago | Reply | Recommend Modern barter has been around for quite some time and can otherwise also be described as "mutual credit". Instead of direct barter, which replies on a co-incidence of wants, equal values, same timing; modern barter uses an intermediary known as a "barter dollar", "barter credit", "trade dollar" or other notational unit. By having a notational currency unit indirect transactions are possible. Where one participant desires $1000 worth of goods from a second participant they can pay in barter credits. The second participant can choose to spend all, some, or none of that $1000 in barter value back with the first trader, or can use the value to buy goods and/or services from anyone else in the network. Interest free credit is extended by these types of barter exchange networks and, unlike traditional forms of lending, a business does not have to repay with cash but can instead pay back with their own goods or services. Also unlike traditional finance, any barter units spent in the network are guaranteed to be returned because they can not "leak" out of the economy. Bartering saves cash for businesses as they are, in short, making purchases out of future sales. They can buy now and repay with a sale brought to them from within the circle of other businesses who are now in credit for that same barter value. An example of one such commercial barter exchange system is the Ormita Commerce Network ( http://www.ormita.com http://www.ormitacommerce.com http://www.ormitacommercenetwork.com ) but there are also some other good networks around like BizXchange, ITEX. IMS (International Monetary Systems), BarterAds, TravelSolutions, BMO Borot and so forth. There is a range of good free literature about barter exchange networks at the Mutual Credit Library / Barter Exchange Library at http://www.mutualcreditlibrary.com.
Mario | 8 years ago | Reply | Recommend

I wonder what was in that letter than convinced the iranians.

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