November 24, 2004

 

 

Pakistan to Continue Ban on Indian Wheat Import

 

Pakistan has refused the Indian request for lifting a two-year ban on its wheat import, asserting that Pakistan will not accept any grain from it, according to officials sources on Tuesday.

"Indian wheat has been banned and will remain banned in Pakistan," an official of the Food and Agriculture Ministry stated.

 

Pakistan imports small amounts of agricultural products from India, including pulses and raw chillies, but imports of most of the other items are officially banned.

 

Pakistan banned the import of Indian grain two years ago, saying that it was contaminated by Karnal bunt fungus. India rejected this stance, while Pakistani traders termed the ban politically motivated.

 

Traders say imports from India would be the most economical option for Pakistan because of lower freight costs given the land border between the countries. "Every other country is buying wheat from India, except Pakistan - it is more a political move," a wholesale food grain trader said about the continuing ban.

 

On the other hand, imports of Indian grain via third countries or for onward shipment continued unabated. But the officials claim, "there is a total ban on the import or overland transportation of Indian wheat."

 

"Earlier in August, Pakistan had rejected a request to allow the import of 200,000 tons of Indian wheat, citing its concern about fungus. It also barred the UN World Food Programme from transporting Indian grain to Afghanistan via Pakistan last year.

 

Although large quantities of produce are smuggled from India into Pakistan, analysts say Islamabad is worried that permitting imports would enable its giant rival to dominate the market both at home and in Afghanistan.

 

It is maintained that Karnal bunt is not dangerous to humans or animals. But it emits a foul odour and alters the colour of contaminated grain. Another official said the ministry had suggested that the government import wheat from either Australia or the United States.

 

Pakistan consumes a little over 20 million tons of wheat annually. Officials say the lower harvest is not immediately expected to affect supply as the country has carry-over stocks of more than a million tons. Experts say that Indian wheat sales in south and south-east Asia have hurt Australian and US grain exports.

 

Almost half of Indian wheat exports last year were made to south-east Asia. The Indian government has yet to decide on renewal of wheat exports. Till the late 1990s, India and Pakistan were wheat importers, with India buying two million tons and Pakistan four million tons.

 

Market experts state that declining production and strong exports have caused Indian wheat stocks to plummet from 23 million tons just two years ago to an expected level of less than seven million tons by the end of this year. Consequently 2003/04 production was revised downward this month to 65 million tons, making it the smallest crop in seven years.

 

Notwithstanding, experts said, due to smaller production and higher prices, exports have continued to be strong as shipments have continued against outstanding sales.

 

The export estimate for India has been raised this month to four million tons. The declining stock situation will likely be a key factor in the determination of government support for wheat exports in the upcoming year.

 

Without government subsidies, India's presence in the global wheat market would diminish drastically.