PASSCO to sell 80,000T of wheat to WFP at $276 a ton

[Omar1984]

PASSCO to sell 80,000T of wheat to WFP at $276 a ton
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Local mills paying $310 a ton for the same wheat; UN body gets lower rates for humanitarian operation in NWFP, Balochistan

Tuesday, November 03, 2009
ISLAMABAD: The Pakistan Storage and Services Corporation will sell 80,000 tons of wheat from its fresh stocks at $276 a ton to the World Food Program for its operation purely on humanitarian grounds, it is reliably learnt.

However, the quantity offered by PASSCO to the World Food Program (WFP) is much below the price the corporation is offering to the provinces and other entities, an official requesting not to be named told The News.

“The Ministry of Food & Agriculture is not doing any business and the quantity is being sold purely on humanitarian grounds as the WFP requested MinFA for the sale of the grain for its operation in troubled areas of the NWFP and Balochistan,” said Yasmeen Masood, joint secretary of the food department.

PASSCO was bearing incidental charges for storing the commodity, she said, adding PASSCO had surplus stocks to meet the domestic requirement for the rest of the year.

Yasmeen elaborated that the decision was not solely taken by the ministry but a formal approval had already been taken from the Prime Minister’s office. An exporter from Karachi told this correspondent: “The government will bear a loss of $2.72 million (Rs228 million) in a single consignment with the World Food Program for the sale of wheat.”

The Pakistani wheat was of top quality and fetches a $15-20 premium per ton on the going rate in global trade. The current price of low quality wheat in the international markets was around $270 a ton, he added.

After intensive negotiation with the WFP, the ministry of food & agriculture had agreed to accept the WFP’s offer of $276 a ton while PASSCO had suffered a loss of $34 a ton thus causing a total loss of $2.72 million to the exchequer, an official familiar with the development told The News.

PASSCO will sell about 80,000 ton wheat from the 2009-10 crop at the rate of $276 a ton to the WFP while its procurement price including other incidentals of the commodity till date has been calculated at $310 a ton — a loss of $34 a ton.

PASSCO and provincial food departments procured 9.23 million tons of wheat in the crop year 2008-09 against the target of 6.5 million tons. PASSCO procured 2.143 million tons. Out of the 2.143 million tons stocks, PASSCO allocated 1.584 million tons to the NWFP, Balochistan, AJ&K, Gilgit-Baltistan, the Pak Army, Pak Navy, PAF, USC and WFP.

Provincial food departments and PASSCO are selling the grain to local buyers at Rs28,000 a ton ($310/ton). “The government is not exporting flour and other wheat products while it has doled out a handsome quantity of wheat to the WFP,” questions a leading miller from Lahore, who asked not to be named.

The same miller said the prices of grain in the local market were too high making exports uncompetitive in the regional markets. The government allocated wheat from the fresh stocks but not from the imported one as to which the Trading Corporation of Pakistan (TCP) is facing difficulty in off-take of these stocks. The TCP has nearly 230,000 tons of imported stocks in its warehouses and lukewarm response from interested parties has forced the corporation to cancel tenders.

The World Food Program was foreseeing a shortfall for its operation in Pakistan and had requested the relevant ministry for the purchase of the aforementioned quantity of wheat, Amjad Jamal, a spokesman for the WFP told The News. Recently, the WFP sought 55,000 tons of wheat for its operation in Pakistan. However, Jamal said he did not know of the recent request and purchase of 80,000 tons of wheat from MinFA. —AM