ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has directed Ministry of National Food Security and Research (MNFS&R) to review the whole wheat procurement system and submit it to the ECC along with action plan.
These directions were issued at a recent meeting of the ECC during discussion on a summary of MNFS&R titled “permission to import of 1.0 MMT of milling wheat for the year 2023-24 to maintain strategic reserves.” The MNFS&R informed the forum that wheat availability for 2023-24 was estimated at 29.81 MMTs, comprising production of 28.18 MMT and public carry-forward stock of 1.63 MMTs.
Bumper wheat production this season would be sufficient to cater to national consumption, however, for maintaining strategic reserves of 2 MMTs, there would be a shortfall of 2.40 MMTs for the year 2023-24.
Deals on import of over 1.3MMTs of wheat sealed
Food year 2023 began on May 01, 2023 with the public wheat stocks of PASSCO and Provincial Food Departments at the level of 7.886 MMTs (stock of 2.85 MMTs with PASSCO). Federal Cabinet on July 26, 2023 allocated 2.73 MMTs wheat amongst recipients of PASSCO as per their requirements therefore on 1 April 2024 at culmination of season, thePASSCO is expected to have carry-forward stock of 0.11 MT.
Local wheat prices for the week ended on October 5, 2023 were reported by the PBS at Rs. 4,823/40 kgs or Rs.121/kg, whereas wheat flour prices were at Rs. 2,789/20-kg or Rs. 139/kg.
Price escalation factors were hoarding, smuggling, low public stocks and delay in public stock releases to flour mills. Due to these factors, public sector (PASSCO and ’Provincial Food Departments) could only achieve 75% assigned target of wheat procurement, ie, 5.97 MMTs against 7.80 MMTs assigned target. It was further stated that price of wheat had started declining and would be further reduced as and when maximum quantity of imported wheat reaches the country and Public Release Policy announced by the respective Provincial Governments. International Grains Council on October 6, 2023 reported price of Black sea wheat at $ 245/MT (FoB); with addition of freight charges, withholding Tax @ 6% and management cost of TCP @ 2%, the CFR price of wheat was estimated at Rs. 86,811/MT or Rs. 3,472/40 Kg at Karachi as compared to the local wheat price of Rs. 121/kg.
M/o NFS&R further stated that a consultative meeting was conducted with the public as well as private sector on September 6, 2023 to review wheat availability, its shortfall and to prepare an import plan. Public and private sector submitted Import Plan and so far 4 vessels of the private sector had arrived at Karachi carrying 274,401 MTs of wheat. Private sector committed for an additional import of 1.34 MMTs till March 15, 2024.
However, certain observations were noted by the private sector like availability of forex/retiring of LCs in time, priority berthing by the Ministry of Maritime Affairs and non-involvement of TCP in the private business as impediments.
The MNFS&R submitted the following proposals: (i) to ensure strategic reserves for the country, formal approval be accorded for import of 1.00 MMT of wheat through TCP for PASSCO under G2G arrangements or through open tendering process, whichever is the lowest and cost efficient in a staggering manner; (ii) private sector be encouraged to import specified milling wheat under Notification of MinFA of November 14, 2008 (and meeting the criteria envisaged in the Import Policy Order 2022); (iii) the State Bank of Pakistan may be directed to submit weekly progress to the Dashboard of MNFS&R regarding details of LC,s opened for the import of wheat; and (iv) Ministry of Maritime Affairs may be directed to provide priority berthing for imported wheat on arrival for both public and private sectors.
During the ensuing discussion it was emphasized that private sector should be effectively engaged to complement the wheat stocks, in case public sector is to procure wheat. It was also proposed that there should be complete procurement planning for doing this which should include exploring all the possible options including G to G as “we market procurement through tendering process based on actual stock position.”
After detailed discussion, the ECC approved wheat import plan submitted by the MNFS&R. The ECC also directed the MNFS&R to review the whole procurement system and submit it to the ECC along with action plan.
Copyright Business Recorder, 2023