Pakistan: Wheat fiasco points towards govt ‘negligence’

Official documents available with Business Recorder reveal that on February 1, 2024, the Economic Coordination Committee (ECC) headed by caretaker Finance Minister, Shamshad Akhtar, was briefed by Ministry of National Food Security and Research that the Provincial Crop Reporting Services for the year 2022-23 reported wheat production of 28.18 MMT. Therefore, with the addition of carry-forward stocks of 1.63 MMT, the total availably of wheat was reported at the level of 32.27 MT, showing a shortfall of 2.40 MMT.

The Ministry of National Food Security & Research submitted a proposal for import of 1.00 MMT through the public sector to maintain PASSCOs strategic reserves. Private sector was encouraged and supported to import the remaining quantity of wheat to maintain the equilibrium in demand and supply of wheat in the country.

The ECC on October 23, 2023 approved the proposal of Ministry of National Food Security and Research and allowed Trading Corporation of Pakistan (TCP) to import 1.00 MMT of milling wheat for the year 2023-24 to maintain strategic reserves of PASSCO. The decision of the ECC was ratified by the Federal Cabinet on October 30, 2023. Simultaneously, the public and private sector initiated the process of import of milling wheat into the country by fulfilling codal formalities and paying taxes.

Import of milling wheat by the private sector had improved the situation of demand and supply and minimized the gap shortfall of wheat in the country. Department of Plant Protection (DPP) reported that up till December 27, 2023 around 27 vessels of the private sector had till then arrived in the country with imported milling stock of 1.270 MMT. It was also reported by the private sector that a further quantity of 1.00 MMT was also expected to arrive till the end of February, 2024.

The matter of import of wheat was discussed in the meeting of Wheat Board held on December 19, 2023 wherein the Provincial Food Departments demanded an immediate stop to wheat imports by the private sector because of the slow releases of the public sector.

Ministry of NFS&R further stated that PASSCO and Provincial Food Departments had reported their public stocks at the level of 6.307 MMT. The stock comprised 1.594 MMT of wheat with PASSCO, 3.617 with Punjab, 0.817 MMT with Sindh, 0.189 MMT with KP and 0.089 MMT with Balochistan.

The ECC was informed that if it was assumed that provinces start to release at their maximum level, it was projected that almost2.845 MMT stock would be leftover at the end of current food year as on April 30, 2024.

In order to decrease the financial liability of PASSCO, the Ministry of NFS&R was also in the process of initiating a summary to the ECC of the Cabinet for re-fixing/reducing the quantum of strategic reserves from 2.00 to 1.00 MMT and Punjab and Sindh to maintain strategic reserves of 1.00 MMT (0.50 MMT each) on their own financial arrangements, in case the Government was considering a minimum level of strategic reserves should be maintained at the level of 2.00 MMT in the country. In this scenario the real shortfall would further be reduced and import of the private sector may supplement the remaining requirement of the country.

Provincial Crop Reporting Services had reported wheat crop sowing of over 22.63 million acres against the target of 22.22 million acres showing healthy progress of over 101 per cent. If the weather supplements the crop, it was expected that this year country would achieve its production target of 32 MMT.

Ministry of NFS&R recommended that in view of current supply situation, projected private import, current public wheat stocks and current release pattern, current sowing pattern of wheat crop projected carry-forward stock of PASSCO, the matter of public sector import of wheat may be withheld, as there was no need of import of public wheat at this point of time through Trading Corporation of Pakistan. However, the Ministry would re-visit the demand and supply situation after compilation of production estimates of the fresh crop and final figures of public carry-forward stocks in April, 2024 and will apprise the ECC, accordingly.

However, insiders claim that Punjab government reportedly kept wheat release rate higher than the private sector, due to which flour mills preferred to purchase Ukrainian wheat imported by the private sector.

The ECC of the Cabinet headed by the caretaker Finance Minister considered the summary December 28, 2023 submitted by the Ministry of National Food Security and Research regarding “Demand and Supply of Wheat in the country” and approved it. Subsequently, the decision was ratified by the caretaker Federal Cabinet headed by Anwar ul Haq Kakar.

Prime Minister Shahbaz Sharif has constituted two committees to probe the matter. First Committee will be headed by Mushtaq Ahmed, Member Federal Public Service Commission and comprise of Rashid Mahmood Langrial, Secretary Power Division and Shakil Ahmed Mangnejo, CMIET (Chief Minister, Inspection, Inquiries and Implementation Commission (Sindh) .

Terms of Reference (ToR) of the Committee are as follows: (i) rationale for import of wheat and reason for import through the private sector, during current food year 2023-24; (ii) assess impact of import on wheat stock, consumption, wheat prices, government stocks, sales and forex reserves; and (iii) estimate production, demand and supply, consumption and final surplus of wheat during next Food Year 2024-25 for making an informed decision on whether to export/import the wheat or not.

Tags: Economic Coordination Committee, supply, demand, импорт, Production, wheat, stocks