December 3, 2010

Pakistani government to face losses on wheat exports

Pakistan's government will suffer a loss of US$130 per tonne on wheat exports as prices of the commodity in the international market are hovering between US$275-US$290 per tonne.

According to the Federal Minister for Food and Agriculture, Nazar Muhammad Gondal, the government is seriously considering allowing exports of around one million tonnes of wheat through the private sector.

A meeting of Economic Coordination Committee will soon be held to approve the wheat export, he added.

The minister said the government would likely export the surplus wheat before the new wheat crop.

"It is a matter of great concern that the government is supporting its allies on the cost of public money as 75% of the wheat growers belong to the ruling party", said Sindh Agriculture Forum (SAF).

An official of the SAF said the government has a surplus of four million tonnes of wheat, out of which one million tonnes are allowed to be exported before the coming of the new crop, which is 90 days away.

He said the support price of wheat has also been increased to PKR1,050 (US$12.24) per 40 kg as the prices of inputs like fertilisers have increased in contrast to last year. "The Punjab government has already rejected the idea of wheat export from the federal government as it will use up a big amount on subsidising export," an analyst said. He said Punjab government owes PKR184 billion (US$2.14 billion) to different banks and food department on the purchase of wheat.

The Punjab government is paying about PKR200 million (US$2.33 million) daily as interest on this amount, and suggested the federal government to increase support prices for farmers instead of losing huge amounts on export, Ahmad said.

"If the government allowed exports in July-August 2010, our wheat export could fetch PKR400-450 (US$4.66-5.24) per tonne," he added.

The cost for per acre production has increased and there would be no attraction for farmers in sowing wheat if the government continues with last year's support price, he said.

The calculation made by the Agriculture Policy Institute suggests that the government had increased support prices to offer some incentives in the form of guaranteed procurement prices to encourage farmers to cultivate wheat.

"Maintaining food security is the key responsibility of the government and it has become a challenge after the recent devastating floods," he added. He said poor farmers need to be supported in the after effects of the recent floods to secure food security for the coming years.

The planning commission has also formed a comprehensive plan to ensure that farmers get the announced support price of wheat.

He said the Ministry of Food and Agriculture is in consultation with all the provinces to finalise the wheat export programme.