Wheat export: Finance ministry turns down request for Rs15b rebate
Sindh, Punjab and Passco have 3m tons of surplus commodity.
The federal and provincial governments want the surplus to be sold before the arrival of new crop in the market to stave off a price crash. PHOTO: INP
ISLAMABAD:
The Finance Division has refused to provide Rs15 billion in rebate on the export of three million tons of surplus wheat stocked in storages in Sindh and Punjab along with the Pakistan Agricultural Storage and Services Corporation (Passco).
The rebate was sought by the Ministry of National Food Security and Research for exporting the commodity.
Despite the refusal, the food security ministry has submitted a summary to the Economic Coordination Committee (ECC) for considering the export of surplus wheat, which would be taken up in the next meeting. The ministry is seeking a way out in an effort to sell the old stock before the arrival of new crop.
Earlier, the ministry had written to the finance and commerce ministries, seeking their green signal for wheat export with rebate facility of $50 per ton in a bid to encourage exporters to dispose of the stock as prices stood low in the international market.
“The issue is very important and needs attention because the surplus commodity will create problems for the farmers in the coming season. In the present of old stock, the farmers may not find buyers for the fresh crop,” an official remarked.
The food ministry believes since the issue is very important, the ECC may be compelled to accept the proposal even without the consent of the finance ministry.
A ministry official said if the stock was not timely exported, bank loans would not be cleared and mark-up would continue to pile up. As a result, the accumulated mark-up would be almost equal to the amount of rebate.
He noted that the export of surplus stock would have dual advantages. On the one hand, it would provide an opportunity for acquiring loans for the new crop after clearing the previous ones and on the other hand it would create space for the new stock in government storages, which would help discourage the investors from exploiting the farmers.
The federal and provincial governments want the surplus 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.
At present, Punjab has a surplus of two million tons, Sindh has 0.6 million tons and the remaining is with Passco.
Published in The Express Tribune, January 23rd, 2015.
The Finance Division has refused to provide Rs15 billion in rebate on the export of three million tons of surplus wheat stocked in storages in Sindh and Punjab along with the Pakistan Agricultural Storage and Services Corporation (Passco).
The rebate was sought by the Ministry of National Food Security and Research for exporting the commodity.
Despite the refusal, the food security ministry has submitted a summary to the Economic Coordination Committee (ECC) for considering the export of surplus wheat, which would be taken up in the next meeting. The ministry is seeking a way out in an effort to sell the old stock before the arrival of new crop.
Earlier, the ministry had written to the finance and commerce ministries, seeking their green signal for wheat export with rebate facility of $50 per ton in a bid to encourage exporters to dispose of the stock as prices stood low in the international market.
“The issue is very important and needs attention because the surplus commodity will create problems for the farmers in the coming season. In the present of old stock, the farmers may not find buyers for the fresh crop,” an official remarked.
The food ministry believes since the issue is very important, the ECC may be compelled to accept the proposal even without the consent of the finance ministry.
A ministry official said if the stock was not timely exported, bank loans would not be cleared and mark-up would continue to pile up. As a result, the accumulated mark-up would be almost equal to the amount of rebate.
He noted that the export of surplus stock would have dual advantages. On the one hand, it would provide an opportunity for acquiring loans for the new crop after clearing the previous ones and on the other hand it would create space for the new stock in government storages, which would help discourage the investors from exploiting the farmers.
The federal and provincial governments want the surplus 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.
At present, Punjab has a surplus of two million tons, Sindh has 0.6 million tons and the remaining is with Passco.
Published in The Express Tribune, January 23rd, 2015.