Government mulls importing wheat to ease price pressure

LAHORE: The federal government will meet today (Thursday) in the federal capital to weigh the options for importing wheat to stabilise prices in the domestic market.

Punjab is all set to present its stance in favour of wheat import.

Despite reaping over 28 millions tonnes wheat during the recently-concluded harvesting season, the country still faces a gap of about 2.5 million tonnes. To streamline wheat supply and prices, the government is seriously considering to import wheat through government-to-government deals.

By doing so, authorities want to give a strong message to hoarders that there is no room for artificially hiking the price of the grain.

The government is also contemplating to give the private sector a free hand in importing wheat in certain quantities. It will double down and escalate action against elements involved in the black-marketing of grains, said an official.

Private sector may require imported wheat in limited quantities as it necessitates mixing of local wheat for producing a better quality flour. Both the steps by the government about its intention to buy grains from the international market as well as involving the private sector in grain import will greatly improve sentiments in the market, breaking the backbone of Atta mafia.

In the prevalent circumstances, such intervention by the government may help effectively stabilise prices and flow of wheat in the market. Above all, imported wheat may greatly lead to reducing flour price in the domestic market as the global wheat market has crashed.

With imports estimated to reach consumption centres at Rs3,200 to Rs3,500 per maund, 20kg flour bag may become cheaper by Rs350 to Rs400, providing much needed relief to the masses.

Pakistan has emerged as a wheat-deficit country in the last several years and thus wheat imports have been on the rise. This is primarily due to declining wheat output in recent years on the back of low quality seeds, climate change and water scarcity. On the other hand, Pakistan's population is growing and the demand for wheat is also increasing.

The Russia-Ukraine war last year disrupted the global wheat supplies and Pakistan has been one of the countries most affected by the development. As a result of these factors, Pakistan's wheat imports have increased significantly in recent years.

In 2021, Pakistan imported 1.2 million tonnes of wheat, up from 0.8 million metric tonnes in 2020. This trend has continued and since than, imports have topped four million tonnes due to the widening demand-supply gap. Moreover, to efficiently use available wheat stocks, Punjab province has formulated a plan to release wheat to flour mills smartly through auction under a competitive process to avoid imports worth millions of dollars. Instead of uniform release of wheat to the mills, including inefficient units embezzling grains worth billions, government’s proposed e-auction is aimed at ending pilferage for good.

Under the traditional method of wheat release to every flour mill as an entitlement, the golden grains are often reduced to trash. It also promotes malpractice, embezzlement, overpricing and contamination in the wheat supply chain. As a result, people not only face shortage and price-hike, but are also forced to buy wheat flour of poor quality throughout the year.