ISLAMABAD, Feb 14: Availability of surplus wheat in the country could lead to collapse of prices in local markets this year.

The government has approved a plan to procure 6.5 million tons of wheat at Rs950 per 40kg, or Rs23,750 (nearly $300) per ton, which is about $100 higher than the rates prevailing in the international market.

In the London commodity market, French and Russian wheat was offered on Saturday at $198 to $203 per ton while the US soft red winter wheat was sold at $202 to $206.88 per ton. The prices are likely to fall further after beginning of harvesting in most wheat-producing countries in March.

The government’s wheat stock position is good enough to meet local demand till April. As of Friday, Punjab had 1.1 million tons of wheat, Sindh 50,000 tons, the NWFP 184,000 tons and Balochistan 65,000 tons. These quantities didn’t include stocks with the private sector.

Some 590,000 tons of imported wheat began arriving at the Gwadar port on Friday. This process would continue until March 5.

The Trading Corporation of Pakistan would complete import of another 272,000 tons of wheat by March 31. The World Food Programme would also provide 30,000 tons of wheat it had borrowed from Pakistan last year.

Thus, a total of 892,000 tons of wheat is due to arrive by March. The government has already completed import of 1.7 million tons of wheat while the private sector had imported 250,000 tons of wheat in January.

The government will have 2.29 million tons of wheat in its stock for consumption in March and April whereas the harvest of new crop will begin in Sindh on March 1 and in Punjab on April 1.

Ibrahim Mughal, the Chairman of the Agri-Forum Pakistan, has called for an increase in procurement target from 6.5 million tons to eight million tons so that small growers could also sell wheat to the government.

He suggested that Punjab should buy four million tons of wheat, Sindh 1.5 million tons and Passco 2.5 million tons.

Tariq Sadiq of the Flour Mills Association said the government had announced the wheat procurement price in haste, without taking international prices and local stock position into consideration.

Additional Secretary of the Ministry of Food and Agriculture Shahid Hussain Raja agreed that price in the local wheat market could decline sharply, but said this would not affect the government’s procurement drive.

He said a high procurement price had been fixed by the government to ensure that the growers got a good return on their crop this year.