Rs 6.045 billion subsidy required to offload surplus wheat

Following the increase in its support price, Pakistan''s wheat has become very expensive as compared to benchmark international price while an amount of about Rs 6.045 billion will be required as subsidy to offload one million tons surplus stock. According to sources, the issue was discussed in the last meeting of Economic Co-ordination Committee (ECC) of the Cabinet, which was briefed by Ministry of National Food Security and Research.
The meeting was informed that Pakistan''s 2010-11 and 2011-12 wheat crop was very expensive when compared with benchmark international price due to "very high price/premium allowed by the government to benefit farmers". It was noted that wheat price in the international market had decreased from $345 per ton to $296 per ton as a result the country was unable to export wheat due to price differential with the international market. It was informed that the private sector was interested in purchasing wheat at Rs 950 per 40 kg whereas the government had increased its support price to Rs 1,050 per 40 kg, which required Rs 6.04 billion as subsidy.
The meeting was informed that Passco had approximately one million tons surplus wheat stock (ex-crop 2010 and 2011), which required immediate disposal because of its huge per day cost of financing. Hence, early disposal of the surplus wheat would not only avoid deterioration of its quality (due to prolonged open storage) but also save huge amount on account of storage/financial cost etc.