Asad keeps on raising alarm over wheat crisis

ISLAMABAD: Federal Minister for Planning Asad Umar has in official meetings warned of a looming wheat/flour crisis arguing that if decisions were delayed then it could not be averted.

However, his warnings have not been heeded as no speedy decisions have been taken yet to avert the crisis.

“Now the looming wheat/flour crisis is knocking at our doors. In an official meeting, one of the top participants was quoted as saying that after creation of a fully-fledge crisis, the government will have to import wheat as well as grant subsidy.

He wondered why the government was unable to take timely decisions arguing that some ministers had been suggesting import of wheat since February but no decisions were taken.

When contacted, former finance minister and renowned economist Dr Hafeez A Pasha said keeping in view the increasing wheat prices, the consumers will have to give extra Rs180 billion from their pockets where the prices of wheat was touching Rs2,000 to Rs2,200 per 40kg on the domestic market against domestic fixed price of Rs1,450.

He said that with extraordinary focus on agriculture sector during the decade of 90s, Pakistan became self-sufficient in wheat production in 1999 and it would be the first time in last 21 years when the government would have to import wheat this fiscal year. “The wheat prices have escalated around 24 percent in the Sensitive Price Index (SPI),” he said and strongly recommended that the TCP should move ahead and import wheat in order to avert crisis. He wondered over the way of handing of these critical issues and stated that the country would have to import 1.5 to 2 million tons of wheat for meeting domestic requirements.

“If the TCP is alive it should move ahead without wasting any time,” he added.

Official sources said that now the government was left with no option but to import wheat through the TCP or provide subsidy to the private sector importers.

The government will have to import wheat keeping in view reduced production of wheat in current season and keeping requirement of minimum strategic reserves.

The wheat prices had started escalating into domestic market in last fiscal year 2019-20 especially in second half (Jan-June) period because the wheat production remained lower than expectations. Both the Center and Sindh had blamed each other for crisis because the Sindh government had not procured wheat in last financial year. However, the wheat requirements fulfilled but exhausted all strategic reserves.

For the current fiscal year, the government fixed wheat production target at 27 million tons but the latest estimates suggested that it would be hovering around 24.7 million tons because of heavy rains in April/May due to which the wheat production damaged.

The government fixed wheat procurement target at 8 million tons but so far it could not materialize 100 percent target. With requirement of keeping strategic reserves requirement of 2 million tons, total local requirement stood at 27 million tons for current fiscal year. So all this shows that there is no other option but to import wheat either by government or private sector.

The country had remained self- sufficient in wheat during the last 20 years so private sector was showing reluctance to import wheat. The landed import cost of wheat was expansive than domestic wheat so the private sector was showing interest but no letter of credit was opened so far in last one month after allowing permission by the ECC.

This scribe made efforts to contact to Federal Minister for Planning Asad Umar but he preferred not to talk on this subject.

However, background interviews and official record showed that Minister for Planning Asad Umar raised the issue of wheat/flour crisis several times in official meeting even in presence of Prime Minister Imran Khan and argued that there was no other solution but to move ahead with provision of subsidy for luring private sector or second option would be to import wheat through Trading Corporation of Pakistan (TCP).

“In one official meeting, it was calculated that the government would have to provide subsidy of Rs 7 to 8 billion but the PTI led government was unable to take timely decision,” said the official sources.

The delayed decision-making might result into providing more subsidy and utilizing national exchequer on import of wheat after facing political backlash and embarrassment, said the official sources as saying by Asad Umar during the official meetings.

The domestic production of wheat has been estimated at 24.7 million tons and the country’s consumption requirement stands at over 2 million tons per month. Keeping in view the strategic reserves requirement, total requirement of wheat is estimated at 27 million tons.

On other hand, Ministry of Finance high-ups argued that now the Ministry of National Food Security to come up with firm up proposal and the ECC meeting could be convened anytime to take final decision on this important issue. It is now hoped that Ministry of Food Security would come up with two to three options to seek approval of the ECC.

The prices of wheat in the domestic market had already gone up to Rs2,100 to Rs2,200 per 40 kg in Punjab and the prices are showing increasing trends in other provinces of the country.

There are close linkages between wheat/flour crisis and political instability and the government was warned that when the flour prices would escalate it would have serious repercussions on political horizon of the country.

The federal government is left with no other option but to go ahead with import of wheat as some ministers termed allowing import of wheat by private sector just “eyewash”, arguing that when international market prices were on higher side, then why the private sector would take risk to import wheat for meeting looming shortages.

The government will have to import wheat in order to avoid exploitation, because it is for the first time in recent history that shortage of wheat started occurring at very beginning of getting the wheat crop.

“The Sensitive Price Index (SPI) might face more pressures because the wheat/flour prices will have psychological effect, so the government will have to move forward in order to avert shortages,” said one participant in the meeting.

Another minister said that after increased support price, the market price should not have touched more than Rs1,550 per 40kg in domestic market, but farmers started hoarding knowing that there would be shortages this year in the market.