Pakistan wrestles with 4.5MT of surplus wheat as domestic prices hurt exports


The country’s surplus wheat stocks had piled up to 4.5 million tons as it failed to export excess grain because of high domestic prices and quality constraints, sources said on Tuesday.

They added that a failure means crops risk rotting in storage houses instead of being sold on world markets to cash in on good prices. According to details, Punjab purchased 4.0 million tons of wheat during the current season, while Sindh procured 1.2 million tons and Pakistan Agricultural Storage and Services Corporation (Passco) procured two million tons.

There were carry forward stocks of 2.5 million tons with Punjab and 0.3 million tons with Sindh. Sources said currently, Punjab government had 6.5 million tons wheat stocks, Sindh 1.2 million tons, Passco two million tons, while Khyber Pakhtunkhwa has stocks of 0.3 million tons.

Of these, Punjab, usually, releases 3.0 million tons to the flourmills; Sindh releases one million ton, and Passco releases 0.4 million tons. Thus, around 4.5 million tons would remain surplus this year.

The provincial Punjab government has approved exports of 1.5 million tons from its surplus stocks, but traders are skeptical on shipment of any big consignments on high local prices. They said major consumer refuses to concede on price and buyers seek a higher quality.

Currently world wheat prices remained around $140 to $180/ton, while Pakistan’s wheat prices remained the highest at around $320/ton (ex-warehouse price) sold to the local flourmills.

During the last two years, surplus stocks of around one million tons were exported to Afghanistan’s bordering provinces through the land route, but the Punjab government stills owes Rs5 billion rebate to exporters and millers, despite that the cases have been moved to the courts.

Asim Raza, central chairman, Pakistan Flour Mills Association, said Punjab government has approved exports of 1.5 million tons this year at a price of $170 and the rebate of $150/ton would be shared by both the provincial and the federal governments. “We have proposed that the government should also give rebate on wheat products for both the sea and the land routes,” he said.

Stakeholders were of the view that since Afghanistan was a natural wheat export market of Pakistan, which consumed 1.8 million tons annually, the country should export 1.5 million tons.

However, due to the high price of Pakistani wheat, Kazakhstan had captured the Afghan market with $90 to $120 a ton, the lowest prices in the world. “Wheat export without rebate is impossible,” Raza said.

Malik Tariq Sarwar Awan, an expert in wheat flour milling, said besides being expensive in the world, Pakistan’s wheat cleaning and quality was not up to the mark. “Pakistan’s wheat requires re-cleaning, which will reduce the prices around three percent, as silt remains part of it after harvesting,” he said.

Awan said Punjab government had stocks of three years 2015, 2016, and 2017 wheat, which were being mixed together and supplied to the local mills at the same price.

“Any delay in the exports would cause financial damage to the government, as it had
acquired bank loans for wheat procurement and was paying interests to them,” he added. “A government policy is needed for the wheat exports, as a better crop is also expected next year.” “We are a wheat growing country and our production is increasing day by day. Our food security requirement is 2.5 million tons, the rest is surplus.”

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