Surplus wheat: Govt mulling over Rs15b export subsidy

Summary to be presented to ECC for approval.

ISLAMABAD: The federal government is considering offering a subsidy of Rs15 billion on the export of more than three million tons of surplus wheat in a bid to encourage exporters to dispose of the stock, sources say.

The federal and provincial governments want all the surplus stock to be sold before the arrival of new crop in the market to stave off a price crash. The support price for wheat has been set at Rs1,300 per 40kg for the new season.

Responding to the proposals sent by the Sindh and Punjab governments, which have most of the excess stock, the federal government has prepared a summary for export, which will be presented before the Economic Coordination Committee (ECC) for approval.

According to the sources, the Ministry of National Food Security and Research has also written to the Ministry of Commerce and the Ministry of Finance, seeking their opinion on providing subsidy for a commodity that is fetching low prices in the international market.

The food ministry has suggested doling out Rs15 billion in subsidy to the exporters with the rebate on a ton of wheat at $50.

The summary is expected to be taken up in the upcoming meeting of the ECC, likely to be held next week.

Earlier, the federal government had asked the governments of Sindh and Punjab to allow export of surplus wheat and in response the provinces sought a rebate of $50 per ton to be borne by the federal government.

At present, Punjab has a surplus of two million tons, Sindh has 0.6 million tons and the remaining is lying with the Pakistan Agricultural Storage and Services Corporation (Passco).

The Ministry of National Food Security and Research was of the view that if the available stock was not cleared before the arrival of fresh crop, the market would crash, sparking protests by the farmers.

“If the old stock is available in stores, no one will be interested in lifting the new crop, hurting the interest of farmers,” the ministry said.

Currently, Pakistan is not only self-sufficient in wheat, but it holds a surplus stock of over three million tons. Despite that, statistics show that half of the population is facing food insecurity due to mismanagement and lack of access to supplies.

Earlier, Sindh had questioned the rationale behind the federal government’s approval of cheap imports from Ukraine despite having domestic produce stocked in storages.

Published in The Express Tribune, January 17^th,  2015.

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