Pakistan is an agricultural country that normally grows enough to meet the needs of its population. The arrival of wheat in the last two years has not played a significant role in curbing the bullish trend in local prices. Pakistan’s flood response centre said ,“A huge stock of wheat for the next 6 months is available along with strategic reserves which is sufficient till next harvesting season.”
Wheat Imports In Pakistan
As per Trading Corporation of Pakistan(TCP)’s data, Pakistan imported 1.7 million tonnes in FY21 out of which Punjab was given over 1 Million Metric Tonnes(MMT) followed by 444,935 tonnes to Khyber Pakhtunkhwa(KP), 117,528 tonnes to Sindh and 114,532 tonnes to Passco to stabilise prices.* Private sector was given permission to import, which brought in about 1.5MMT in the above period. *
The government has not allowed the private sector to import in FY22. In FY22, the TCP imported 2.23 MMT out of which 519,412 tonnes were delivered to KP and 1.684 MMT to Passco. As per Pakistan Bureau of Statistics data, the country imported 211,597 tonnes of wheat in July valued at $107M while the TCP further imported around 800,000 tonnes in August’22. *
The government should allow the private sector to import wheat to bridge the inflation gap as the Sindh government would release wheat to the millers in October or November.*
Domestic Price Hikes in Pakistan
Chairman of Pakistan Flour Mills Association (PFMA), Chaudhry Aamir, said that wheat was being sold between Rs.9,100-9,200 per 100kg in the open market while mill owners were supplying the commodity at Rs105-106 per kg which was being traded at Rs115 in the retail market.**
This was higher in comparison to the previous month’s Rs7,800 per 100kg for wheat and Rs82 per kg for flour, up by Rs1,400 per 100kg for wheat and Rs24 per kg for flour.**
As per Aamir, wheat stocked in Sindh had been destroyed due to the heavy rains and floods and cultivation would be destroyed if the flood water did not recede.
Reasons for Seeking Government’s Import Approval
The PFMA chairman said that reserves were available to meet local requirements but possible delay in the cultivation of the crop following the devastating floods in the country was speculated. The calamity not only destroyed houses and roads but also crops spread over millions of acres subsequently creating fears of a food shortage. Therefore, he had hoped that by importing the commodity by the millers, the price of wheat and flour would come down and the hoarding of wheat would stop.
The mill owners sought permission for the import of wheat as the price of wheat surged by 10-20% on the outlook for a possible delay in the sowing of wheat in October and the doubling of the grain support price to Rs4,000 per 40kg** by the Sindh Government for the next cultivation season. The PFMA chairman expressed hope that the price of flour would reduce after the mills received the commodity from the Sindh Government.
