March 28, 2011
 

Pakistani provinces declare grant on wheat exports 

Two of Pakistani provinces, Punjab and Sindh, which export millions of tonnes of surplus wheat across the private sector to meet their budgetary needs, have declared a grant of PKR600/tonne (US$7.05) on expedited exports of the commodity, sources in Karachi said.

The conditional grant would, however, be given to those shipments that would have been dispatched before April 30, 2011, prior to the next wheat procurement season. If it is calculated based on the given preliminary export target of three million tonnes, the grant will cost the fiscal deficit-hit provincial governments not less than PKR1.8 billion (US$21.1 million).

Sources told that, while the subsequent wheat procurement season is imminent, the two provinces do not have the financial capability to repay billions of rupees lent from banks for purchasing wheat during the current season. Furthermore, the two provinces were also running out of storage area where millions of tonnes of wheat were still waiting to be sold out.

"The provincial governments have had their bank borrowing limits full and, to seek more loans, they would first have to clear previous credits," sources said. They added that, looking at the large volume of unsold wheat, provincial governments were unable to repay bank loans.

Sources claimed that the two governments did not have space in their warehouses to store wheat, which is to be procured during the forthcoming season.

"They want their existing wheat reserves to be sold out primarily through exports at the earliest," they added. According to sources, provincial governments had originally intended to export three million tonnes of wheat. However, since January, private exporters were only able to export about 600 tonnes, sources claimed.

"Supply of exportable wheat from the two provinces is very slow," said an official of a stevedoring firm with access to exports. He claimed that the Punjab government seemed unable to move more than 1000 tonnes of wheat daily.

"Fateh Rehman remained anchored at Karachi Port for weeks due to shortage of wheat supply," sources said. According to sources, surplus provincial wheat was being exported through Karachi Port and Port Qasim, at a dedicated grain terminal operated by Fauji Akbar Portia and Marginal Wharf.