ECC okays cheaper wheat import

The wheat import decision was taken by the Economic Coordination Committee (ECC) of the cabinet, which also allowed rupee-based trade with Afghanistan for one year to take off the pressure on foreign exchange reserves.

However, it relaxed the import ban on goods that had already arrived in Pakistan as of June 30.

The ECC approved the lowest bid of Cargill International/ Cargill Agro Foods Pakistan at a rate of $439.4 per ton for 110,000 tons to the extent of a total of 500,000 tons of wheat import, according to the Ministry of Finance. The total contract price is $220 million.

The ECC asked the Ministry of National Food Security to explore the possibility of wheat import on three-month deferred payments due to the external sector constraints.

However, the private sector parties are not expected to load wheat until confirmed letters of credit for import are opened with banks.

Earlier, Pakistan imported 500,000 tons of wheat at $515.4 per ton, bringing the contract price to $258 million.

The new offer is 15% cheaper than the last contract, but the benefit will only be Rs10 per kg due to the depreciation of the rupee.

Pakistan faces a shortage of four million tons of wheat and so far it has finalised contracts for one million tons.

The meeting was informed that a government-to-government deal with Russia was expected to be finalised in the current month for import of another one million tons of wheat.

The Ministry of Industries presented a summary for a supplementary grant of Rs53.4 billion to provide five subsidised goods at the Utility Stores Corporation.

The government had budgeted Rs17 billion for the purpose but the amount appeared to be sufficient to meet just one-fourth of the total needs. “The ECC decided to continue subsidies on five essential commodities with direction to the Ministry of Industries and Production to work out feasible proposals on subsidy programmes keeping in mind the financial implications,” said the decision.

The demand for nearly Rs54 billion additional funds comes five days after the enforcement of the new budget, indicating that the whole budget exercise has increasingly become irrelevant due to the under-statement of expenditure requirements.

The industries ministry demanded Rs19.4 billion for providing subsidy of Rs60 per kg on wheat flour and another Rs42 billion for a subsidy of Rs250 per kg on edible oil.

The ministry also sought Rs6.3 billion for giving subsidy of Rs21 per kg on sugar.

The ECC directed the industries ministry to again work out the financing needs keeping in mind the tight fiscal space.

The ECC approved a request of the World Food Programme (WFP) for the purchase and reservation of 120,000 tons of wheat from the imported wheat stock of Passco at the latest import price.

The amount of supplied wheat along with the cost and incidentals would be charged in US dollars.

The wheat will be locally grinded into flour and will be supplied to Afghanistan by the WFP, subject to the relaxation of ban on the export of flour to the extent of the instant proposal of 120,000 tons of wheat.

In view of the situation in Afghanistan and on humanitarian grounds, the Ministry of National Food Security and Research requested the provision of wheat to Afghanistan through the WFP.

The ECC did not take a clear decision on the Ministry of National Food Security’s request to declare the “National Disease Emergency” on account of the emergence of Lumpy Skin disease in Pakistan and allocate Rs3.8 billion for emergency purposes.

The ECC after detailed discussion directed the Ministry of National Food Security to prepare a cost sharing plan after convening a meeting with the provincial secretaries concerned and NDMA, according to the decision.

The ECC was informed that the expected economic loss to the farmers because of the lumpy disease was Rs80 billion and it was feared to spread rapidly across the country due to Eidul Azha. Buffaloes and cows are affected by the viral disease.

The Ministry of Commerce submitted a summary to seek permission for one-time release of those consignments of items banned on May 19, 2022, which have reached Pakistan or would reach or their payments.

In order to resolve the hardship cases, the ECC granted a one-time special permission for the release of consignments stuck at ports. The relaxation has been given only for those consignments which had landed at ports or airports in Pakistan on or before June 30, 2022.

The nearly two-month-old ban has proven ineffective to contain the import bill that surged to $80 billion in the last fiscal year.

In view of the hardship cases of timber importers, the ECC deferred the enforcement of the requirement of import permits and plant protection measures till August 31, 2022, ie for the Bills of Lading issued till August 31, 2022.

The ECC also approved another summary of the Ministry of Commerce to allow import of goods of Afghan origin against Pak rupee and without the requirement of electronic filing of import forms for a period of one year.

The requirements have been relaxed subject to the condition that Afghan exporters will provide the Certificate of Origin.