Private sector import of wheat: Deadline extended despite opposition by Punjab

ISLAMABAD: The federal government has extended the deadline for the import of milling wheat till March 31, 2024, by the private sector despite opposition from the Punjab government, which is worried about slow lifting by the mills, well-informed sources told Business Recorder.

The decision was taken at a recent meeting held in the Ministry of National Food Security and Research convened to re-consider the requests of the Pakistan Flour Mills Association (PFMA) and the Cereal Association of Pakistan (CAP).

The purpose of the meeting was to consider the matter of extension in the import period and the issue of re-fixation of support price of wheat crop 2023-24 by the governments of Sindh and Balochistan.

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The meeting was attended by the representatives of the agriculture and food departments of the provincial governments, representatives of the PFMA and the CAP, and senior officials of the attached departments of the ministry.

A comprehensive discussion was held on the following agenda; (i) extension of wheat import in pipeline till March 13, 2024; and (ii) notifications of provincial governments of Sindh and Balochistan for revising the minimum profitable support price of wheat crop 2023-24.

The sources said, in the meeting Wheat Commissioner/ Food Security Commissioner-II (FSC-II) apprised that the PASSCO and provincial governments have reported that at the start of the food year as on May 1, 2024, carry-forward stock would be in the range of 3.21 MMT, comprising 1.60 MMT with Punjab, 0.40 MMT with Sindh, 0.10 MMT with KP, 0.046 MMT with Balochistan and 1.10 MMT with PASSCO.

Production estimates as reported by the provinces are in the range from 28 to 28.50 MMT against the set target of 32.12 MMT, comprising 21.33 MMT by Punjab, 4.00 MMT by Sindh, 1.40 MMT by KP and 1.36 MMT by Balochistan.

The meeting was further informed that at this point in time, a possible shortfall of 1.60 MMT has been estimated due to weather pattern and low fertiliser intake. However, correct estimates will be submitted by the respective provincial governments at the end of March 2024. For the current food year 2024-25, wheat requirement at the national level is estimated at 32-94 MMT, including 2.00 MMT for strategic reserves and 1.50 MMT for seed, feed, and wastages.

The meeting was apprised by the FSC-II that due to the appropriate strategy of the ministry, public import by the Trading Corporation of Pakistan (TCP) was withheld which benefited the country with the saving of $ 335 million. Additionally, an amount of $59 million has so far been deposited by the private sector in the government kitty on the import of 2.50 MMT of milling wheat.

Due to timely import by the private sector in the crucial months from December-March, the prices of wheat/ wheat flour are stabilised as compared to 40 per cent increase in the corresponding period of last year. In the current year, wheat production in India has also been affected due to Al-Nino and recent estimates are at104 MMT, showing a shortfall of around eight MMT; therefore, India is considering the proposal of extending a ban on the export of wheat during 2024. Russia’s production estimates will arrive in March 2024.

However, protests by the Kissan Associations in India and Europe and security risks in the Black Sea and the Red Sea will create pressure on the pricing trend of milling wheat worldwide. Therefore, in the current scenario, the proposal of PFMA and CAP for extending the import period till March 31, 2024, may be considered.

FSC-II further explained that public stocks are at the level of 5.10 MMT comprising 2.72 MMT with Punjab, 0.71 MMT with Sindh, 0.13 MMT with KP, 0.089 MMT with Balochistan, and 1.45 MMT with PASSCO. Department of Plant Protection has reported that the private sector has so far imported 50 vessels carrying 2.56 MMT milling wheat, whereas, a quantity of 0.5-0.60 MMT is still in the pipeline and expected to arrive in March 2024, for which importers are seeking formal approval.

In case of no permission following complications were mentioned;(i) low production estimates showing its shortfall will complicate the situation; (ii) price trend, especially during Ramadan will escalate; (iii) complications in the import cum export scheme of Ministry of Commerce under Export Facilitation Scheme-2021; (iv) imposition of regulatory duty or tax structure will affect the proposed barter trade of the country through the Trading Corporation of Pakistan under G2G and B2G; and (v) WTO objections for restriction on food items.

The Punjab Food secretary argued that due to the slow lifting of public wheat by the private sector, there would be a quantum of 1.6-2.00 MMT wheat with the department, therefore, private import may be discouraged. On the issue of re-fixation of the support price of wheat, it was explained that Punjab will strictly follow the federal government’s support price ofRs3,900/ 40kg.

Dr Anjum, former DG Agriculture Extension Punjab apprised that due to the availability of improved seed and fertiliser and a departmental campaign, early sowing of wheat was completed by November 15, 2023, and the province exceeded the nine per cent sowing target. However, due to climate change patterns, drought, and smog issues estimates of production would be in the range of 21 to 23 MMT.

The DG Agri-Extension Sindh explained that no increase in the support price of wheat crop 2023-24 has so far been notified by the province. The same price of Rs4,000/ 40kg is notified.

FSC-I argued that after consultation with the provinces, the federal government approved the support price of wheat @ Rs3,900/40kg on December 20, 2023.The Government of Sindh not objected at that time; however, unilateral initiative may not only distort the local market but with the imposition of Article-144 the movement of wheat within the country would be discouraged which is a strict violation of the Constitution; therefore, D.O. letters from the caretaker Minister for NFS&R on February 22, 2023, have been sent to the caretaker chief ministers of Sindh and Balochistan with the request to re-visit their earlier notification issued on February 14, 2024, and January 29, 2024, respectively.

Representative of the Food Department Balochistan viewed that amendment in the support price of wheat @ Rs4,300/ 40kg was the initiative of the Agriculture Department. The Food Department has never proposed any change to the Provincial Cabinet against the Federal Government’s policy.

The same view on the support price of wheat was recorded by the Director Food Khyber-Pakhtunkhwa. He supported the decision of the federal cabinet for fixing the profitable support of wheat crop 2023-24 @ Rs3,900/ 40kg.

The private sector explained that as per commitment with the federal government, the initial plan of import was till the end of February 2024; however, due to the delay in the Red Sea and Black Sea areas the risk of sailing has increased manifold.

Vessels are halted at various places and can only depart under the Flag of US/ UK Naval ships. Due to such risks and harsh weather, the voyage period from the Black Sea region has increased from 20 to 40 days. They assured that in case of any shortfall in future, private importers will serve the nation by applying their own resources in order to stabilise local wheat prices at the national level.

After a detailed discussion, it was decided that: (i) import of specified milling wheat by the private sector has been allowed till the March 31, 2024; (ii) no further import should be allowed, in any case alter March 31, 2024; (iii) Department of Plant Protection (DPP) will ensure proper inspection of specified wheat vessels till March 31, 2024 as per list provided by private importers; (iv) Ministry of Maritime Affairs (MoMA) and State Bank of Pakistan (SBP) will be requested to facilitate the private sector as per decision of the ECC of the Cabinet of July 23, 2023,in terms of providing priority berthing and LC opening, etc respectively; (v) private sector will ensure to provide the updates and information pertaining to the import of wheat to the office of the DPP; and (vi) on the issue of issuance of notifications by the provinces of Sindh and Balochistan, regarding re-fixation of support price of wheat may be taken up with the provincial governments with the request to re-visit their decisions.

Copyright Business Recorder, 2024