Pakistan’s wheat uncompetitive in international market

KARACHI - While export of wheat has already been halted, despite huge stocks in the country, due to stiff competition outside the country, fresh increase in wheat support price will further make agricultural products uncompetitive in the international market. Interestingly, despite cheaper wheat available outside the country, people would be consuming costlier products despite a surplus of 4-5 million tonnes of wheat in the country. Fresh increase in support price was also likely to lead to an increase in prices of essential commodities and inflation, sources told Profit. It is worth mentioning here that government has recently increased wheat support price for new crop by 10.5 per cent to cover increased cost of production. This was the third augmentation in wheat price since current government took over in March 2008. Although provincial governments have reservations over the decision made in a meeting presided over by Prime Minister Yousaf Raza Gilani, government had decided to fix wheat support price for next year at Rs1, 050 per 40 kg for (procurement) by Pakistan Agricultural Storage and Supplies Corporation. Previously, the price was Rs950 per 40kg. Even though the fresh move would support growers in covering increased cost of production under shortage and costly availability of fertiliser, government should rather have pondered over other ways to reduce cost of production like reduction in input prices, particularly that of urea. Doing so wheat could be produced and exported at competitive prices. According to official sources of Wheat Traders Association of Pakistan (WTAP) the export cost for Pakistani Wheat was over $305 per MT FOB Karachi. Fresh jump in support price will further increase this cost making the country’s product more uncompetitive in the global market where Indian and black sea prices, consisting of Russian/Ukraine origin, were available at around $240 to $260 per MT. The drastically reduced price of the product in international market has made Pakistani export not only difficult but nearly impossible in world’s markets. The country’s export of wheat has halted after the export of around two million tonnes after the removal of three years’ ban over its exports due to an increased competition in international market. However, despite the expected huge stock by next crop, and zero export, domestic price of the commodity was likely to increase after the increase in support price, sources claimed. Besides, there would also be storage issue for the stock as the country has limited storage facilities. Sources in the wheat export association suggested that a ‘Comprehensive Food Board’ should be made to resolve food related issues as existing organisations could not to formulate and apply a balanced food strategy. The country still has room to export almost over 1 million tonnes before the next crop. The country’s wheat was aimed to be sold in the markets of Africa, Middle East Bangladesh and others. (Courtesy: Pakistan Today)