Provinces have demanded over 2.2 million metric tonnes of wheat to arrest prices of wheat flour that soared up to Rs150 per kilogramme, as the Centre plans to import roughly 1 million metric tonnes of the commodity through the Trading Corporation of Pakistan (TCP).

The federal government has so far decided to import the commodity through the official channels – the TCP – which might prove expensive in terms of price and incidental charges compared to private sector imports.

Official wheat flour prices have already jumped on average by 74% to Rs129 per kilogramme as of last Friday compared to a year ago, according to the Pakistan Bureau of Statistics. The rates were as high as Rs150 per kilogramme in Peshawar, according to the office of the Rationing Controller of the provincial government.

According to a decision taken in the federal Wheat Board meeting, the provincial governments would provide back-to-back Letters of Credit (LCs) against the imports. In case of any shortfall in payments against the imported wheat, the federal government would deduct money from their shares in the National Finance Commission award.

These decisions were taken on Monday during the board meeting, which was presided over by the Federal Minister for National Food Security Rana Tanveer Hussain, with four provincial governments in attendance. The board reviewed the prevailing wheat supply situation and provincial requirements to ensure food security and market stability.

The officials said four provincial governments placed their final demands for the requirement of wheat during the board meeting to fill the supply gaps. The shortages were pushing prices high despite officially claimed production of 29.7 million metric tonnes of wheat and another 2 million tonnes of stocks.

The food ministry believes that total availability was still slightly higher than requirements, yet wheat and flour prices were constantly on the rise despite the announcement to import the commodity.

The officials said the government of Punjab placed a demand for one million metric tonnes of wheat, to be supplied either from stocks held by the Pakistan Agriculture Services and Storage Corporation (PASSCO) or by importing the commodity. Punjab produced nearly 22 million metric tonnes of wheat this year but badly failed to meet the 3 million metric tonnes procurement target, contributing to the national wheat management crisis.

The officials said Sindh demanded 720,000 metric tonnes of wheat, including 500,000 metric tonnes to be supplied through imports and the rest to be provided from PASSCO stocks available in the province. Likewise, Khyber-Pakhtunkhwa sought 200,000 metric tonnes of imported wheat and another 225,000 metric tonnes of local wheat. Balochistan demanded only 57,500 metric tonnes against stocks held by PASSCO.

The federal food ministry officials said that after finalising financing arrangements with the provinces and signing written agreements, a summary will be tabled before the Economic Coordination Committee of the Cabinet for the import of wheat through TCP.

However, the sources said the federal government has not yet decided to allow the private sector to import the commodity, which could prove more cost-effective compared to imports through official channels. During the wheat board meeting, a representative of the private sector asked the government to allow private sector import, but the board did not accept the request, said officials. The government stated that provincial requirements would be met only through TCP import.

The private sector also sought free movement of wheat across the country by relaxing inter-provincial restrictions to meet demand where there are shortages.

During the meeting it was transpired that due to the anticipated supply gap with available stocks at PASSCO and the need to stabilise the wheat market, there will be a need to import approximately one million metric tonnes of wheat, said the officials.

The provinces were again asked to submit their confirmed written requirements by Tuesday to finalise the import plan and determine the modalities before submitting the summary for ECC approval.

The wheat board decided that import would be made through transparent competitive bidding by TCP. Representatives of provinces will be requested to view the procurement process as well as become technical committees to ensure transparency in quality specifications and procurement procedures.

The imported wheat would be allocated among participating provinces proportionate to their confirmed requirements, along with their share of existing PASSCO wheat stocks, according to the decision.

The Punjab government representative reiterated the requirement for one million metric tonnes. Punjab had no objection whether this requirement was met through existing PASSCO stocks, imported wheat, or a combination of both. But the provincial representative stated that the Punjab cabinet would make a decision regarding the proposed import mechanism, including provincial participation in procurement, back-to-back LCs, recovery of payments through NFC deductions where applicable, and proportionate allocation of imported wheat with PASSCO stocks.

Sindh also informed that the provincial cabinet had approved import of 500,000 metric tonnes through TCP and procurement of 220,000 metric tonnes from PASSCO stocks.

It was decided that technical experts and nominated representatives of the provinces will be included in the technical committees engaged in procurement to ensure transparency and direct provincial participation throughout the import process. The quality specifications of imported wheat shall be finalised by the respective provincial governments.

The landed cost of imported wheat, based on the agreed quality specifications, would also be borne by the respective provincial government. Wheat allocations to each province will comprise its proportionate share of both imported wheat and available PASSCO wheat stocks, as determined by the federal government, according to the decision.