Four million tons of surplus wheat: aggressive export plan needed as prices rise in international market

The government is needed to adopt an aggressive wheat export plan, as the international wheat prices have shot up to $342 per ton, which is $65 higher than the domestic wheat price, $277 per ton. Pakistan has nearly four million tons of surplus wheat stocks after meeting its local demand, sources in the Ministry of Food and Agriculture (MinFA) told Business Recorder.
They said that Pakistan could earn $845 million by exporting 2.5 million tons of wheat at current price prevailing in international market. Pakistan has exported 0.5 million tons of wheat at Rs 1,000 per 40 kg, however now the government can export the commodity at around 1,200 per 40 kg.
Wheat purchased at the government announced procurement price (Rs 950/40kg wheat) cost US $277 per ton. However, at present due to shortage of the commodity internationally, wheat price has touched $342 per ton. Pakistan in 2008-09 produced over 24 million tons of wheat and in 2009-10 produced 23.86 million tons.
Officials said that due to favourable conditions the government had set wheat production target for current year at 25 million tons and the recent rains would have positive impact on the wheat crop. Besides, last year's floods have raised the moisture level in the soil as compared to the previous year, therefore, next wheat yield may cross the target.
Sources said that current stocks of wheat were almost eight million tons, while country needs only 2.1 million tons for the next 90 days when the new crop will arrive in the market. "Furthermore, there is no space to stock the next wheat crop due in April, as over three million tons of wheat is already lying under open skies across the country," they added.
Sources added that the government had already provided a grant of Rs 2400 per acre to farmers with land holdings up to 12.5 acres in flood affected areas for the cultivation of Rabi crops, especially wheat. Under the scheme the government provided 50 kg wheat seed and one bag of urea per acre to small farmers in the flood-hit districts.
Due to severe financial problems, Punjab government wants to export over three million tons of wheat after retaining stocks to meet the demand of other provinces expect Sindh province, which has sufficient wheat stocks. According to an official of Punjab Food department, Punjab, the largest wheat producer, had obtained Rs 174 billion in loans from the State Bank of Pakistan to buy wheat from farmers and was paying a daily interest of Rs 70 million.
Pakistan's total wheat consumption is around 22 million tons annually, out of which nearly 18 million tons of wheat is being consumed in Punjab and Punjab has 5.7 million tons of wheat stocks until the arrival of the new crop in April while consumption is not more than two million tons. Chairman AgriForum Pakistan, Ibrahim Mughal when contacted said that the government should export at least 2 million tons of wheat this year, as in international market the price of the commodity was high due to damages to wheat crop in Australia. He added that at present international wheat price was $350 per ton.