AZADPAKISTAN2009
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ISLAMABAD: A ministerial committee of the Economic Coordination Committee (ECC) on Friday decided to export one million tons of wheat at market prices plus a premium to Iran under a barter trade deal that would allow Pakistan to import urea for current Kharif season.
The committee constituted by the ECC is led by Water and Power Minister Syed Naveed Qamar and comprised minister for national food security and senior officials of food security and commerce ministry, and managing director of Pakistan Agricultural Storage and Services Corporation (PASSCO).
Informed sources said the meeting decided to accept Irans offer to purchase wheat at prevailing price in the international market and in addition pay a premium of $8 per ton that would translate into about $285 per ton under current market prices.
The sources said the international price of the quality of Pakistans produce was on the higher side as similar quality wheat could fetch over $300 per ton.
The meeting, however, noted that the sale price should be seen in the context of lower price of Iranian urea that would compensate Pakistan if it imported urea from the open international market.
Syed Naveed Qamar, who presided over the meeting, directed Passco to finalise the modalities for export of one million tons of wheat to Iran so that first shipment of wheat could be delivered during the current month and in exchange urea could be imported that was direly needed for the Kharif season as gas cuts would lead to fertiliser shortage.
He said while Passco would make arrangements for wheat export and urea import, the case would be presented to the coming meeting of the ECC for formal approval next week.
An official statement quoted the minister as saying that the government had already decided in principle to export one million tons of surplus wheat from Passco stocks and also some quantities of rice to Iran on barter trade arrangement. In exchange, Iran has agreed to provide urea and iron ore to Pakistan.
Secretary National Food Security Shafqat Naghmi briefed the meeting about the details of a recent meeting with Iranian authorities and said that the transportation would take place through sea route.
He said what ever the price of total one million tons of wheat, it would be adjusted against urea import.
While Pakistan may have to bear additional burden in maintaining wheat stocks if not exported to Iran given the fact that international prices were maintaining a declining trend, it would benefit Pakistan because it would not have to spend its foreign exchange in procuring urea from the international market which was currently on the higher side.
A recent meeting of the ECC had decided to provide Rs6 billion subsidy to sell its surplus wheat stocks to local millers at Rs950 per 40 kg about Rs100 lower than procurement price of Rs1,050 per ton for the current crop.
The federal government had earlier directed Passco to sell 200,000 tons of wheat at Rs25,000 per ton plus cost of packing material for export purposes but no wheat could be exported due to cost differential of Passcos wheat and international market price.
The cost of Passco wheat comes to Rs30,845 while international prices have come down from Rs29,540 ($354) per ton to $296 per ton.
Passco had contended that early off-loading of the one million tons of surplus stock was crucial because operation for procurement of next wheat crop will suffer due to shortage of storage space while Passco was incurring Rs13.395 million as storage and mark-up cost per day.
Therefore, the government was left with a situation where it could only minimise its losses. Early disposal of surplus stock would not result in any gain but the government will save Rs4.9 billion out of Rs6 billion per year borne on account of storage cost and other incidentals and vacated storage spaces.
Despite rains and floods in two consecutive years, Pakistans major crops wheat, sugarcane and rice have yielded bumper output that is much larger than domestic consumption.
The committee constituted by the ECC is led by Water and Power Minister Syed Naveed Qamar and comprised minister for national food security and senior officials of food security and commerce ministry, and managing director of Pakistan Agricultural Storage and Services Corporation (PASSCO).
Informed sources said the meeting decided to accept Irans offer to purchase wheat at prevailing price in the international market and in addition pay a premium of $8 per ton that would translate into about $285 per ton under current market prices.
The sources said the international price of the quality of Pakistans produce was on the higher side as similar quality wheat could fetch over $300 per ton.
The meeting, however, noted that the sale price should be seen in the context of lower price of Iranian urea that would compensate Pakistan if it imported urea from the open international market.
Syed Naveed Qamar, who presided over the meeting, directed Passco to finalise the modalities for export of one million tons of wheat to Iran so that first shipment of wheat could be delivered during the current month and in exchange urea could be imported that was direly needed for the Kharif season as gas cuts would lead to fertiliser shortage.
He said while Passco would make arrangements for wheat export and urea import, the case would be presented to the coming meeting of the ECC for formal approval next week.
An official statement quoted the minister as saying that the government had already decided in principle to export one million tons of surplus wheat from Passco stocks and also some quantities of rice to Iran on barter trade arrangement. In exchange, Iran has agreed to provide urea and iron ore to Pakistan.
Secretary National Food Security Shafqat Naghmi briefed the meeting about the details of a recent meeting with Iranian authorities and said that the transportation would take place through sea route.
He said what ever the price of total one million tons of wheat, it would be adjusted against urea import.
While Pakistan may have to bear additional burden in maintaining wheat stocks if not exported to Iran given the fact that international prices were maintaining a declining trend, it would benefit Pakistan because it would not have to spend its foreign exchange in procuring urea from the international market which was currently on the higher side.
A recent meeting of the ECC had decided to provide Rs6 billion subsidy to sell its surplus wheat stocks to local millers at Rs950 per 40 kg about Rs100 lower than procurement price of Rs1,050 per ton for the current crop.
The federal government had earlier directed Passco to sell 200,000 tons of wheat at Rs25,000 per ton plus cost of packing material for export purposes but no wheat could be exported due to cost differential of Passcos wheat and international market price.
The cost of Passco wheat comes to Rs30,845 while international prices have come down from Rs29,540 ($354) per ton to $296 per ton.
Passco had contended that early off-loading of the one million tons of surplus stock was crucial because operation for procurement of next wheat crop will suffer due to shortage of storage space while Passco was incurring Rs13.395 million as storage and mark-up cost per day.
Therefore, the government was left with a situation where it could only minimise its losses. Early disposal of surplus stock would not result in any gain but the government will save Rs4.9 billion out of Rs6 billion per year borne on account of storage cost and other incidentals and vacated storage spaces.
Despite rains and floods in two consecutive years, Pakistans major crops wheat, sugarcane and rice have yielded bumper output that is much larger than domestic consumption.
