August 19, 2013

Pakistan may relax wheat import restrictions

Pakistan may ease import restrictions on wheat as the country faces 500,000 tonnes of shortfall for the crop in 2013.

A proposal to reduce 6% withholding tax on wheat import and further simplification of procedural requirements are being considered to ease the supply of grain. This will help bridge wheat shortage and result in lowering its price in the market.

As per proposal, wheat imports to a level of 500,000 tonnes in next three months would be sufficient to meet domestic requirement before the arrival of the next batch of crop. An official said that wheat shortage of varying intensity is being felt in Khyber Pakhtunkhwa, Balochistan and Sindh. Immediate steps are required to increase supplies in the market.

According to the official, Punjab has been self-sufficient in its annual requirement of wheat. However, he added that demand in other federating units could affect its wheat demand and supply if robust imports are not made.

The likely shortfall of 500,000 tonnes would occurred by late 2013 or with the advent of the New Year. Pakistan may have to capitalise on present declining trend in international wheat prices and encourage imports by private sector.

Meanwhile, wheat prices are expected to decline furhter in the international market following recent estimates of a good output of wheat during the on-going year. As reported by the USDA, global production for 2013-14 has risen by 7.6 million tonnes this month at 705.4 million as increases for the EU and former Soviet Republics (FSU), improve overall prospects of good crop.

The USDA report reveals that wheat production for the EU is up by 2.8 million tonnes this month at 141.4 million. The largest increase is projected for Spain - up 0.8 million tonnes at 7.7 million - thus putting the country's wheat yield at a record high.