LAHORE, July 18: The government may soon withdraw Rs2,500 per ton export subsidy on wheat because the country has no surplus stocks and is under no pressure to clear them.

This was stated by Qadir Baloch, Wheat Commissioner, on Friday while talking to Dawn on telephone. He said that Rs3,500 per ton subsidy was reduced to Rs2,500 last year as the pressure to clear domestic stock subsided in 2002 because of lower production of wheat. This year, there is no need to subsidize export because there were no substantial stocks left in the country. On the basis of these calculations, the government was considering total withdrawal of the facility.

But Mr Baloch also ruled out any immediate decision to import wheat either and maintained that the country has 20.25 million tons of stocks — 19.25 million tons of current year production and around one million carry over stocks. The total seasonal need of the country was only 19.20 million tons, and this includes around 0.6 million tons for Afghanistan also.

Even if there was three per cent growth in consumption, the country would still be left with around 500,000 tons at the end of the current season. Under these circumstances, there was no need to import wheat.

Commenting on the fears expressed by the Pakistan Flour Mills Association about the impending trade ties with India and wheat being included in the import list items, he said that no policy decision had been taken so far. Import from India would specially be tricky for Pakistani farmers and businessmen because of heavy subsidies there.

Talking about export, he said that it was totally free and anyone can take wheat out of the country. But exporting it without any subsidy does not make commercial sense because of low rates in the international market.

Meanwhile, the Pakistan Flour Mills Association (PFMA) on Friday said that with the exchange of trade delegations between Pakistan and India, chances of trade had brightened and wheat could be prime item because of heavy carryover stocks lying in India. The Indians are carrying stocks from 1999 production. Once the India wheat starts trickling in, farmers from Pakistan would suffer badly because of heavy subsidies there.

The PFMA demanded of the government to come up with a clear policy on the issue.

The PFMA also claimed that Indian traders were already offering it a price of Rs6 per kg, which makes it Rs240 per 40 kg — Rs60 less than support price in Pakistan. Indian wheat is of much inferior quality and the Indians traders could reduce the price further and render Pakistani wheat commercially unviable, it feared.