May 3, 2006

 

Pakistan slaps 10 percent regulatory duty on wheat imports

 

 

Pakistan has slapped 10 percent duty on the import of wheat to encourage traders to buy from domestic farmers, a government minister said Tuesday (Apr 2).

 

Sikander Hyat Bosan, Pakistan's minister for food and agriculture, told a news conference that the Prime Minister Shaukat Aziz has approved the imposition of 10 percent regulatory duty  on wheat imports with immediate effect.

 

"It will discourage wheat import and will encourage private sector to buy local wheat," Bosan said, adding that the government will ensure that farmers get a minimum guaranteed price of PKR415 per 40 kilogramme set by the Pakistan government. (US$1=PKR59.85)

In Jul 2005, the Pakistan government removed all duties on wheat imports to improve food supplies to check rising domestic prices. Since the removal of the duty, local traders have imported an estimated 850,000 tonnes of wheat from countries like Canada, Russia, Australia and the US.

 

Bosan said this year the government has fixed the procurement target at 5 million tonnes, up from 3.94 million tonnes procured by the Pakistan government last season. The government already has stocks of 2 million tonnes from last year's crop, he added.

 

Pakistan's government buys a portion of the country's total wheat output at a state-set price to maintain reserves as well as offer income stability to farmers.

 

Last month, Bosan had said that the country's wheat crop may be around 20.5 million tonnes, well below earlier expectations of a bumper crop of 22 million tonnes.

 

Bosan said the wheat output estimate had to be cut back because of unfavourable weather conditions for the wheat crop in the key wheat-growing Punjab province.

 

Pakistan produced 21.6 million tonnes of wheat in 2005. Pakistan's wheat crop is sown from November to January and harvested in April and May.

 

Local traders have said Pakistan annually consumes around 21.5 million tonnes of wheat and even if the current wheat crop is only 20.5 million tonnes, carryover stocks of another 2 million tonnes from the 2005 crop would keep supply well above demand.