KARACHI (March 08 2004): Pakistan's grain authorities have rejected all four shipments of Australian wheat, totalling 150,000 tons, after re-examination proved that the grain was contaminated with 'Karnal bunt fungus', officials said on Sunday.

"They (shipments) tested positive for Karnal bunt contamination," an official of Pakistan Agriculture Storage and Services Corporation (Passco) said.

"The decision was communicated to the supplier after scientists re-tested earlier wheat cargoes from Australia, and two new cargoes of 70,000 tons, which confirmed the presence of Karnal bunt fungus," he added.

The official said re-examination proved that the grain also carried sand and dust particles and insects.

A re-examination of the grain was carried out after Australia's wheat exporter AWB Ltd challenged Pakistan's claim, saying that 'Karnal bunt' disease was not found in Australia.

Tradesman International, a Pakistani firm, bought the grain from AWB Ltd, and sold it to Passco at $224 per tonne C&F.

Haroon Suleman, chief executive of Tradesman, also confirmed that Passco had informed him about its decision of rejection late on Saturday evening. "But we have told them (Passco) that we cannot accept their decision," he told Reuters.

"We have demanded another re-examination of all the rejected cargoes in a third country to verify Pakistani scientists' claim of 'Karnal bunt' in the grain," Suleman said.

He said Australian experts, who re-tested the grain along with the Pakistani scientists, had claimed the fungus found in the grain was not 'Karnal bunt'.

"There is some serious dispute on the findings and nature of the fungus found in the grain between the experts of two countries," he added.

However, the Passco official said it was unlikely that Pakistani authorities would agree on re-examining of cargoes a third time.

"The cargoes were re-examined and the results were compiled in the presence of Australian experts...so we think the issue is now settled," he added.

Australia on Sunday said it was seeking urgent advice from Pakistan about reports that tests had confirmed the presence of a grain disease in shipments of wheat from Australia.

The disease has never been found in Australia and Pakistani officials agreed to carry out further tests on the disputed cargo.

Trade Minister Mark Vaile said Pakistani media reports quoting unnamed government sources had indicated the tests had come back positive.

"(We) have sought urgent advice from Pakistan's Prime Minister, His Excellency Mir Zafarullah Khan Jamali, in an attempt to clarify the reports," Vaile said in a joint statement with Agriculture Minister Warren Truss in Sydney.

Truss said Australian scientists had found no disease in the shipment and if there was a dispute over the presence of the disease then further tests should be carried out by an independent laboratory.

"The best approach would be to seek independent third-party DNA testing --for example in US or UK government laboratories," he said. "Australia strongly urges the Pakistan government to agree to this course."

Australia is the world's third largest wheat exporter and is keen for the 3.5 billion dollar (US $2.6 billion) trade to maintain a clean bill of health.

Courtesy Business Recorder