ISLAMABAD: A supplementary report of the inquiry committee on wheat crisis submitted to the Prime Minister’s office by the Federal Investigation Agency (FIA) has found a justification in the recommendations of Pakistan Agricultural Storage and Services Corporation (Passco) and the food departments of Punjab and Sindh for the export of surplus wheat in the second half of 2018.

The FIA prepared the instant supplementary report after a number of queries had been raised by the PM office on the previous findings of the inquiry committee.

To prepare the supplementary report, the committee held a series of meetings with Punjab Chief Minister Usman Buzdar, the national food security and research secretary, the provincial food secretaries of Punjab, Sindh and Khyber Pakhtunkhwa, Punjab food director, and former food secretaries of Punjab Shaukat Ali and Zafar Nasrullah Khan.

According to the report, considerable surplus stocks, existence of old stocks that were prone to disease and damage, slow releases of wheat from the public stock, requirement of physical space for the new crops and heavy mark-up on bank loans prompted the provincial governments and Passco to recommend exports.

New findings say Sindh cabinet did not take timely decision on procurement

All these entities pushed for export in order to create physical and fiscal space for upcoming procurements, reduce financial burden and avoid the risk of contamination of old stocks.

On the query that what prompted Passco as well as Punjab and Sindh governments to recommend wheat export in the second half of 2018, the report stated that from perusal of record of the ministry of national food security, Passco and food departments of the two provinces, it transpired that Passco and the provincial governments recommended export of wheat due to considerable surplus wheat stock, especially with Passco, Punjab and Sindh.

The available public stocks at the time of moving the summary to the Economic Coordination Committee (ECC) were at the level of 10.178 million tonnes. Passco and Sindh based their export recommendation on the availability of surplus stocks whereas the food department of Sindh claimed that non-export of surplus stocks would adversely affect the storage capacity of Sindh warehouses for the next procurement as well as the prolonged storage would posed the risk of infestation.

The Sindh food department pointed out that non-export of wheat had negatively affected the financial space of the provincial government due to slow pace of retirement of borrowings from commercial banks.

The report concluded that the export proposed in the latter half of 2018 and carried out subsequently did not unduly benefit any particular person or company.

Inquiring into the query related to the approval for release of public sector surplus wheat to poultry association, the supplementary report says that Passco record showed it was apparent that all 16 applicants were accommodated proportionately to their demand and there was no disproportionate allocation to any party. The poultry feeds sector in general reaped the benefits of an unprecedented policy decision about the provision of subsidised wheat to the poultry feed mills.

In response to the query about the posting of a secretary in Punjab for only two months during procurement season while wheat shortage was associated with factors including massive and rapid transfers and mismanagement, the supplementary report says none of the summaries moved for the postings of four secretaries cited any reasons for frequent removal of secretaries of food department.

A query of the prime minister’s office says when overall procurement showed deficit of around 2.5 million tonnes, including federal government and provinces, how come three different governments procured the targets, the supplementary report says the committee has re-examined this aspect and submits that the procurement season for Sindh province starts in March and it is clear that the cabinet did not take any decision on the summary thus no procurement was made at all. This remains an inexplicable action but does not seem to be connected to the factors that affected Passco, Punjab and Khyber-Pakhtunkhwa.

Asked about the reasons for Sindh not to procure wheat, the report says that the Sindh cabinet did not take any decision on procurement. It says the Sindh food department moved a summary in January 2019 for the procurement of 0.5m tonnes of wheat. The summary was placed before the cabinet a month later but the cabinet did not take immediate decision.

Record showed that the Sindh food department repeatedly placed requests through summaries and notes seeking approval for the procurement of 0.5m tonnes of wheat. The food department clearly sensitised the government that an early decision was required as the process of procurement needed to be started as soon as possible. The department also informed the government that Punjab and Passco had already started the procurement process.

The Sindh cabinet, however, constituted a committee to evaluate open market price of wheat and option of its export so that decision on procurement could be taken accordingly. The decision was completely inexplicable as to how could the option of export of wheat determine the cabinet’s decision on procurement.

Published in Dawn, April 16th, 2020