Wheat flour negotiation: Federal govt rebuffs K-P’s discount request

Directs provincial government to buy at the rate finalised earlier.

ISLAMABAD:

The federal government has turned down a seemingly unreasonable request made by the Khyber-Pakhtunkhwa (K-P) government to provide them wheat flour at a discount after the rate had been finalised earlier.

Sources told The Express Tribune that the K-P government requested a supply of 400,000 tons of wheat, which was agreed at an upfront payment of procurement cost from the Pakistan Agriculture Storage and Services Corporation (Passco), at Rs37,125 per ton that included incidental charges.

After obtaining only 161,789 tons, K-P officials have shown their disinterest in further procurement from Passco at the same rate and, instead, want a lower price.

Sources said that the Economic Coordination Committee (ECC), in its meeting held on November 21, was informed that the total wheat stock held by the provincial governments and Passco were around 5.58 million tons as on November 19, 2013 which should prove sufficient for domestic needs till the arrival of new crop in April 2014.

The ECC was informed that more than 2,000 metric tons of wheat and wheat flour were being supplied from Punjab to K-P by dealers, putting additional burden on Punjab wheat stocks, which could be available if stocks were released by the federal government.

The meeting was further informed that the Pakistan Flour Mills Association had requested for at least 400,000 metric tons of wheat for K-P to avoid an additional increase in the price.

However, the K-P government has shown no interest unless it was provided to them on a discounted rate. The flour mills were, however, ready to make an upfront payment.

The meeting observed that it would be desirable to ask the K-P to immediately lift the remaining quantity of wheat from Passco for which it had had already made a payment. It was further informed that prices of wheat flour have increased in K-P by Rs50-55 per 40 kilogram during the first half of November and might move upwards if the supply was not improved.

“This would not only ease the pressure on the wheat supply from Punjab to K-P but would also have a beneficial effect on the price of wheat in K-P,” observed ECC members. “Moreover, the National Food Security and Research ministry needs to periodically review the wheat stock in the country.”

The economic decision-making body directed the National Food Security and Research ministry to ask the K-P government to immediately lift the remaining quantity of wheat from Passco for which they had already made an advance payment so as to address the deficiency in the province.

It said that K-P should also be informed that the federal government would consider releasing wheat to the Flour Mills Association of the province as per their required demand in case they did not lift the wheat, already been purchased, from Passco.

Published in The Express Tribune, December 8^th, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.