Wheat exporters demand subsidy for export

Wheat exporters will be in need of subsidy or rebate on exports from the government as they could not sale the huge stock of the products due to lower price in international markets.
The price in the international market is likely to be reduced further after the fresh crop next month keeping the country’s products halted despite huge stocks, wheat exporters told Profit.
Under the price difference in domestic and international markets, the exporters of wheat need subsidy or rebate on export as the country which has already huge stock of wheat would have a surplus of over 4 million tonnes after the fresh crop.
As the exports from the country have been completely halted for the last few months, there was no chance of international trade in the near future as the price would be further dropped in the world market from next month.
According exporters the prices of wheat and flour in the international market and Afghanistan were less than the price in Pakistan and the government would have to pay a subsidy on wheat in order to meet the difference. According to available data during last couple of months the price of wheat in international market was $180-220 per tonne (Rs 612-640 per 40kg) while its price in the local market was about $280-300 per tonne (Rs 950-1,050 per 40kg). However, wheat products like flour were being exported specially to Afghanistan but the continued drop in price was likely to create problems for value added products outside the country. But despite the huge difference of price in international and domestic markets, the price of wheat in the country would remain same as the government has maintained the bench mark on the item. Talking to Profit, Dr Bilal Aslam Sufi, member Pakistan Flour Mills Association and director of Sufi Wheat Products, said that government has maintained the price of 40 kilogram flour at Rs950 for the millers and with the subsidy of Rs200/40kg given by the government the flour of 40 kg flour is available at Rs1000. Government will be giving the same subsidy on Rs1200/40 kg flour cost to mills during 2011-2012.
As the price has been fixed, the reduction in wheat or flour price in near future would not be made despite drastic reduction of price in international market and huge surplus in the country, he added. Talking about the export of flour to Afghanistan, he said that the neighboring country, for export of flour/wheat, is being treated as the fifth province of Pakistan as the products under the government policy were being supplied on regular basis.
According to Sufi the government should not be worried about the complete halt of wheat exports despite surplus stocks. He said the export of wheat flour was priced higher and would earn more foreign exchange to the country as compared to raw wheat. The available stock of wheat could be exported after value addition and with higher prices if the government gives subsidy to flour millers.
It is worth mentioning here that Pakistan was aiming to export around 3 million tonnes of wheat by mid-July 2011, but could not meet the target due to stiff competition of Russian wheat in international markets. Pakistan still has room to export almost 1.2 million as at least 1.71 million tonnes of the commodity was exported out of the total 3 million tonnes, allowed by the government this year after imposing a three year ban on wheat exports.