Pre-empting shortage and rising prices, the Economic Coordination Committee (ECC) of the Cabinet on Saturday decided to import two million tonnes of wheat on a government-to-government (G2G) basis, while 1m tonnes through an international tendering process under the existing arrangement.
The ECC meeting presided over by Finance Minister Miftah Ismail also approved supplementary grants of nearly Rs123 billion including one for payments to lawyers associations and subsidy amount on petroleum products differential claims of oil companies.
It is billed to spike further due to lower output in most wheat-growing regions, supply chain disruptions on account of the Russia-Ukraine war, and export restrictions imposed by major exporters like India. Even at current prices, Pakistan requires over $1.5bn to cover its supply shortfall. The TCP is reported to still not have made purchases. But how long can Pakistan delay imports? Even though the authorities have decided to buy 2m tonnes from Russia on a government-to-government basis, the plan faces many hitches due to the Western sanctions against Moscow, with the exclusion of that country from the global payment system being the biggest issue. So much for that plan for now.
The estimated supply gap for the current marketing year is 3m tonnes, owing to a lower targeted wheat harvest of 26.9m tonnes this season as against the annual demand of 30.8m tonnes. The shortfall is due to warmer than usual weather, water scarcity, and the high price of fertiliser that is in short supply.
On the issue of bridge financing facility for Punjab Food Department for Ramazan package subsidy on wheat flour, the ECC decided that in case subsidy is not approved by the Punjab cabinet, the shortfall will be bridged by the federal government but the government of Punjab will ensure that provincial cabinet approves the package as soon as its meeting is convened.
The looming wheat shortages had become visible as early as February, when the government confirmed that the area under wheat cultivation had dropped by 2.2pc from the previous year and existing stocks had declined. The government announced at that time that it would import 2m tonnes of grain from Russia to shore up strategic stocks in anticipation of a lower output.
The ECC approved an extension in the construction period of K-2 from Nov 30, 2020 to May 21, 2021 and K-3 from Sept 30, 2021 to April 18, 2022 for ensuring the disbursement of a pending loan of $383 million before the expiry of its availability on June 3, 2022, from the Exim Bank of China to the contractor, who has already completed the project.
The looming wheat shortages had become visible as early as February, when the government confirmed that the area under wheat cultivation had dropped by 2.2pc from the previous year and existing stocks had declined.