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.


Overall favourable conditions in July, mostly warmer and drier weather in northern Europe, have resulted in rapid wheat maturation and benefited countries from Ireland and the UK to France, Germany, and Poland - the major EU wheat producers.
Therefore the good prospects of wheat production would certainly lead to declining trend in its prices. The wheat import is expected to bring prices to fairly reasonable limits. Not only imported wheat is available in the international market at comparatively less prices but imports itself help force hoarders to sell their produce in the market, sources said. Owing to this dual affect, it is expected that wheat price could be reduced by PKR100 (US$0.97) to PKR150 (US$1.46) per 40 kilogrammes in the open market, depending on the quantity of imports.
Moreover, sources said, real price fall will be seen when provincial governments start releasing wheat to flour mills. It will subsequently stop the trend of price escalation of flour.