President intervenes: Pakistan, Iran break deadlock over barter trade

Published: July 20, 2012
Email
Tehran will import wheat after quality check, supply fertiliser in exchange. ILLUSTRATION: JAMAL KHURSHID

Tehran will import wheat after quality check, supply fertiliser in exchange. ILLUSTRATION: JAMAL KHURSHID

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.

Facebook Conversations

Reader Comments (14)

  • Truth bites
    Jul 20, 2012 - 6:47AM

    I have been living in tehran lately and missed pakistani wheat floor immensely

    Recommend

  • Tabish Bilgrami
    Jul 20, 2012 - 9:03AM

    Gooood Work indeed…..

    Recommend

  • Ahmer Ali
    Jul 20, 2012 - 10:29AM

    But remember that US’ has clearly defined that it shall use all available possible powers to control/stop trade from Iran to any country especially oil due to imposed sanctions………..
    Who shall control USA???????

    Recommend

  • RS
    Jul 20, 2012 - 10:59AM

    Barter trade (especially among neighbors) under present global financial difficulties would the best way out. Pakistan may like to encourage barter trade with India, Afghanistan n china could prove to be beneficial for these countries. Intended plan to extend India land route to Afghanistan via Pakistan-it would have been better to let India exported these goods to Pakistan (in barter trade with Pakistan) n than these Indian goods Pakistan to forward Afghanistan with the goods Pakistan needed from Afghanistan. Such mechanism would have reduce security matters (India deliver/pick goods from land border of Pakistan) and than these goods exchanged at Afghnistan border against Pakistani required goods. It’s just an idea n think tanks could polish it further.

    Recommend

  • Jul 20, 2012 - 11:05AM

    It’s Good to hear that we are trading with our neighbor “Iran”.! Welldone

    Recommend

  • Voice of Gilgit
    Jul 20, 2012 - 11:09AM

    I like this process…Happy

    Recommend

  • No visa
    Jul 20, 2012 - 1:23PM

    The barter is not by choice but out of compulsion due to the global sanctions on Iranian Financial sector which makes it almost impossible to open L/C. A similar arrangement has been made on a much broader scale with India.Recommend

  • Freedom Seeker
    Jul 20, 2012 - 1:51PM

    At last some thing nice came from President intervention. Mr. Zardari proved not to be an all out evil.

    Recommend

  • salim
    Jul 20, 2012 - 2:18PM

    get ready of US sanctions…………Recommend

  • Hegdefunder
    Jul 20, 2012 - 7:37PM

    Be very careful about your dealings with Iran, as Uncle Sam is not a asleep and may withold that $650 million towards the CRF !
    Which really the Top Brass in Pindi will not take kindly to, as they desperately also need this monies !

    Recommend

  • C. Nandkishore
    Jul 20, 2012 - 7:49PM

    I say again: Zardari is the best President Pakistan has ever had. If he is removed it will be a tragedy for Pakistan.

    Recommend

  • Kaspar
    Jul 21, 2012 - 12:17AM

    @Freedom Seeker:
    REad the report carefully please. While giving the credit to the president, nowhere does the report mentuion the terms under which the matter was ‘resolved.’ What is the price per ton on whcih agreement has been reached. Sometime back it was $275, says the report. But the Pakistnai delgation was asking for $400 per ton and Iran was offering far less, $255 per ton–later perhaps revised to $275 per ton. So where is the elemebt to rejoice and eulogise our great president in this issue?

    Recommend

  • Mario
    Jul 21, 2012 - 12:33AM

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

    Recommend

  • Selina Markham
    Aug 15, 2012 - 4:08AM

    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.Recommend

More in Business