Wheat export to Kabul: PFMA accuses FC, FIU of creating hurdles

The Pakistan Flour Mills Association (PFMA) has reportedly accused the Frontier Constabulary (FC) and Army's Federal Investigation Unit (FIU) of impeding export of flour to Afghanistan, sources told Business Recorder.
Recently, the federal government has allowed export of one million tons of wheat/flour, through the private sector, on the request of Punjab government, which, according to reports, has been paying Rs 70 million interest on wheat procurement loans. The wheat stock currently with the provincial food departments and Passco is 9.07 million tons with food departments holding 7.79 million tons, and Passco 1.48 million tons.
During 2009 and 2010, unprecedented bumper wheat crops, of 24.03 million tons and 23.84 million tons, were harvested. The government procured 9.23 million tons and 6.71 million tons of wheat during the two years. Pakistan's exporters are allowed to export wheat products to neighbouring Afghanistan through two bordering points--Chaman and Miran Shah. However, the exporters have complained against the law enforcing agencies.
"We are receiving reports that in Balochistan, FC authorities are creating undue hindrances. Besides, exporters are being harassed by FIU which is creating panic among the exporters," said Asim Raza Ahmad, Chairman, of PFMA, in a letter to the federal government.
Pakistan has surplus wheat stocks and its export is not only a source of consumption of surplus commodity but also a source of earning foreign exchange for the country. "We appreciate your sincere efforts in getting approval for free export of wheat products, but unlawful acts on part of law enforcing agencies will mitigate the chances of free export of wheat products to Afghanistan," said, Asim Raza in the letter.
According to PMFA, Commerce Ministry has been requested to issue directions to the concerned authorities not to create undue hindrance in the free export of wheat products to Afghanistan.
The rate of lifting of wheat from the public sector stocks by the flour mills is slow as compared to last year. During 2009, the mills had lifted 2.15 million tons by November 25, 2009 whereas this year the quantity lifted by the same day is 1.74 million tons. This indicates availability of wheat with the private sector which has retarded consumption of stocks in the public sector.
According to sources, Punjab government had proposed to allow export of wheat/wheat products in appropriate quantities to reduce the overload and to make space for the 2011 crops. Estimated acreage and production of wheat for 2011 is 9.045 hectares and 25 million tons respectively.
Commerce Ministry had, however, suggested that ceiling of 1 million tons may not be imposed and for monitoring purposes export may be allowed against authorisation/permits issued by the concerned provincial food departments that would be responsible to adjust the outflows as warranted by circumstances. Export stations shall, however, maintain exporter-wise accounts and concerned Collectors shall report to the FBR and Commerce Ministry on daily basis.
Punjab Food Department procured 3.7 million tons of wheat with a carry-forward stock of around 2.9 million tons, making a total of 6.6 million tons out of which 2.5 million tons was earmarked for federal strategic reserve. The Food Department was holding 6.1 million tons on October 25, 2010. The loan liability against these stocks is required to be paid to the banks and the daily mark-up of these stocks has risen to about Rs 77.5 million out of which Rs 24.6 million is to be shared by the federal government against the cost of strategic reserve, leaving a daily mark-up liability of approximately Rs 52.9 million against the Punjab government. Besides, the old wheat stocks are more susceptible to damage as compared to the new crop.