Duty-free wheat import by private party allowed

Amid a political debate over the wheat and flour crisis, the government on Monday allowed duty-free import of 300,000 tonnes of wheat to ease an enormous price hike.

The decision was taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh. The meeting also allowed the power division to issue Rs200 billion worth of Islamic Sukuk bonds to finance a part of circular debt now estimated at Rs1.72 trillion.

Informed sources said the national food security and research ministry told the ECC meeting that about 4.2 million tonnes of wheat stocks were still available in the system. The quantity is enough for two months of domestic consumption 2.1m tonnes per month while fresh crop would also start coming to the market by the middle of March.

The flour price ranged between Rs800 and Rs1,200 per 20kg. It witnessed an increase of up to Rs20per kg against the official rate of Rs1,3501,400 per 40kg. It was explained that wheat stocks at this stage last year were around 7m tonnes, compared to 4.2m tonnes this year, hence a psychological factor was at play.

But more importantly, a thin margin between demand and supply and a big price differential between domestic and international markets offered an ideal opportunity to hoarders, black marketeers and commodity smugglers to make quick bucks.

Also, two other factors contributed to the crisis. First, the Sindh government procured 35 per cent lower than the target set by an interprovincial committee on food and the ECC. Second, an increase in toll charges by the agencies under the communications ministry led to strikes and resultant disruption in normal wheat transportation. Therefore, it will be a political decision to allow wheat imports to send a message of comfort to the market about its availability.

According to the sources, Minister for National Food Security

Khusro Bakhtyar insisted on import of 400,000 tonnes of wheat already announced by senior PTI leader Jehangir Tareen.

Dr Hafeez, however, believed that 300,000 tonnes would be enough to restore market confidence.

The meeting was told that there had been 60pc regulatory duty on export of wheat and wheat products since July last year. Wheat price in the international market currently stands at around $230 per tonne, compared to about $100 or so at home. With the removal of regulatory duty and inclusion of transportation cost, wheat will be available in Karachi and Hyderabad at lower than the prevailing price, where the imported quantities will be utilised.