Prodintorg Emerges on the Pakistan Wheat Market
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The Government of Pakistan approved a deal worth nearly $112m to import 300,000 tons of Wheat from Russia to meet its domestic shortfall in late October. The agreement endorsed by the Economic Cooperation Committee (ECC). Under the deal, the Wheat was supplied by Prodintorg, a Russian state corporation. The Trading Corporation of Pakistan, the Government entity mandated for importing and exporting commodities, said that sanctions imposed by Western countries did not hit Prodintorg.
The ECC, headed by Federal Finance Minister Ishaq Dar, approved the purchase of Wheat from the Russian Government at $372 per ton on the Ministry of Food Security and Research proposal. For the first time in two years, Wheat is being traded between Pakistan and Russia under an agreement. Commodity watchers say that due to shipping and other costs of Wheat imported from Russia, the price of flour in the flour market is likely to remain at Rs 95 per kg. It is more or less the same price as local Wheat flour.
Pakistan Government estimate shows that Pakistan will face a shortage of 2.6 million tons of Wheat this year until the new Wheat crop is ready and marketed. According to State Bank data, imports from Russia and Ukraine accounted for 77.3 percent of total Wheat imports last year. Russia shipped 721,966 tons of Wheat to Pakistan in Nov-Dec 2022 (as of December 21), followed by Romania (59,000 tons) as per AgFlow data.
Pakistan’s Latest Wheat Developments
In late November, the Federal Government started importing another 500,000 metric tons of Wheat in the wake of its shortage following the recent devastating floods in several parts of the country. The Trading Corporation of Pakistan has already issued a tender for the import of Wheat. Sealed bids were invited from international suppliers of Wheat till November 28. Proposals were invited to import Wheat from December 16, 2022, to February 8, 2023. It was decided not to accept bids of less than 100,000 metric tons.
In September, Prime Minister Shehbaz Sharif said that Pakistan might have to import about a million tons of Wheat because of the destruction of farmland following the floods. “It can come from Russia, but the country is open to other offers,” he noted.
One dimension of grain purchases taps into one of Pakistan’s most existential issues — its relationship with neighboring India. When asked about the possibility of buying grain from India if needed, the Prime Minister said the notion was impeded by “a legal bottleneck” — Kashmir.
In the same month, the Federal Government decided to supply 1.5 million tons of Wheat to the provinces to overcome the shortage amid devastating floods. It approved the provision of Wheat to Sindh, Khyber-Pakhtunkhwa, and Azad Jammu and Kashmir. The Wheat crisis had already started in the country during the tenure of the PTI Government when intermediaries and hoarders stocked it up to inflate prices. Widespread smuggling to Afghanistan was another reason leading to the disappearance of Wheat flour from the market. Keeping in view the situation faced in the past, the Government has been working on building strategic reserves to address any shortage of Wheat in the country.
Pakistan Agricultural Storage and Services Corporation (PASSCO) Managing Director Saeed Ahmad Nawaz said that the rains and floods damaged the Wheat stock at the Government warehouse. However, Wheat fit for human consumption has been successfully separated from the damaged stock and is now being supplied. Due to the current situation, food security may remain a matter of concern in the coming months. He explained the high prices of urea, electricity and other inputs discourage farmers from sowing Wheat.
Other sources: TRIBUNE
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