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ADB for open bidding to procure, sell wheat
KARACHI, April 14: The Asian Development Bank (ADB)
wants the closure of all the provincial food
departments and procurement and sales of strategic
wheat reserve entirely on market rates by the
PASSCO, a federal government agency.
It means that PASSCO will float tenders to invite
bids from the traders at the time of harvesting to
build up the strategic wheat reserves at the
lowest possible price and on the best possible
terms. The official support price has to be a
merely reference price.
During the lean period, normally in winters just
before harvesting, the ADB wants the disposal of
wheat from the strategic reserves through open
bids so that government gets the highest possible
price.
The ADB proposal is to be discussed next Monday at
a meeting of all the bureaucrats of the federal
and provincial food establishments at Islamabad.
Under a wide ranging agricultural reform programme,
the ADB offered $250 million loan about three
years ago of which the wheat procurement and
disbursement constitutes a small part.
The provincial governments were expected to close
down all their food departments by June 2002 and
the federal government was expected to take up the
responsibility of food security.
The regulatory functions of the provincial food
departments were expected to be taken over by the
PASSCO to ensure fair return to the growers and
also stable prices for the flour consumers.
The government is going ahead with building up
total reserve of 5.5 million tons strategic wheat
at a total cost of more than Rs65 billion in the
current season. But the ADB wanted the government
to procure only two million tons by way of
tendering, had its schedule been observed by the
government.
The Monday meeting is expected to discuss the ADB
proposal of further deregulation and
liberalisation of wheat trade that provide millers
and traders a bigger role in wheat economy of over
Rs250 billion.
"Will the ADB proposal bring any good news for the
farmer or the consumer," a market analyst was
asked. He was convinced that neither the farmer
will get a fair return nor the consumer will get
flour at the competitive rates in the market if
wheat was procured and sold on bids. "There is
open competition in Pakistan market but cartels
control the trade," is the judgement.
In Pakistan market is neither competitive nor
transparent. There are big sharks, the known 'seths'
who have been manipulating and controlling
Pakistan's food market for years. They did this in
close nexus with the officials and will continue
to do so with new partners in the game after
officials are marginalised.
But the bureaucrats are not happy on their wings
being clipped in this game, that involves as much
as at one time more than Rs20 billion subsidy in a
year. For years together, before 1999, the country
imported wheat.
Decisions to purchase wheat from the US, Australia
and other countries were taken entirely by the
bureaucrats. Also to benefit were the agents of
shipping companies. A nephew of late military
dictator General Ziaul Haq as an agent of a
shipping company in the US made big money during
the decade of eighties.
For these reasons, the bureaucrats have been
putting one hurdle after the other in
implementation of the ADB proposal. But then the
ADB proposal has built in contradictions. "If the
provincial food departments are corrupt then
PASSCO is not an organisation of angels," an
official said.
A report on Food Security Plan in 1997 during
Nawaz Sharif government indicts PASSCO for
mismanagement and there was a proposal to wind up
PASSCO. PASSCO got a new lease of life after 1999
military take over.
Things have not changed after 1999 when the
country has attained wheat autarky in the year
2000. The government fixes official prices of
wheat and make programme for procurement. Farmers
are never paid the official price.
A procurement centre caters to farmers in 30 to 40
miles radius area. There are hardly any roads and
transport. For a small farmer of 16 to 25 acres,
it is just impossible to carry his wheat to the
procurement centre.
The powerful wheat broker working in close nexus
with the big wadera of the area and full patronage
of district bureaucracy literally snatches wheat
from farmer at hardly 50pc of the officially fixed
price. He makes money on 50 per cent margin.
Wheat watchers say that even now when market
prices are higher than the officially fixed
prices, the farmers get hardly 60 per cent of the
government price. Low interest rates of banks and
easy terms has facilitated the wheat broker moves
around with tons of money and offer hard cash to
the farmers at throw away price. This is a fact
acknowledged by the State Bank report issued
recently.
But for a change, the circumstances have brought
corrupt bureaucrats in open confrontation with the
unscrupulous traders and brokers. There is no
political party or even an NGO that could educate
people on this new emerging contradictions in the
ruling elite.
The DAWN
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Pakissan.com; Advisory Point
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