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Flour export to Afghanistan raises price
in local markets
By Intikhab Amir
Already pressed hard by the federal government's decision of
gradually doing away with the subsidy on wheat in line with
its commitments with international donor agencies, the
unlimited exports of flour to Afghanistan have further
burdened the people of Pakistan.
 The
rising exports of flour to the war-torn country, if on the
one hand, has helped Pakistan in generating economic
activities, it has to it several ills as well, on the other
hand.
The rise in demand for flour from across the border and the
private sector's increasing involvement with Afghan
importers has resulted in price increases the local markets
have undergone over a period of last several months.
Undoubtedly, this has resulted in more economic activities,
more jobs for daily wagers, more business for the transport
sector and more profits for the flour dealers and millers,
particularly of Punjab's. As an off-shoot, it has caused
more burden for atta consumers.
The five month long ban on the transportation of wheat from
Punjab to other federating units, apparently meant to check
hoarding of wheat, helped its mills to carry out their
operations in full swing as there was no one to pose a
challenge to them. They were not only feeding flour to NWFP
markets. Rather, it was only their product which flooded
Afghan markets, too, as the NWFP flour mills - about 260 in
number - were out of business because of shortage of wheat.
Though the closure of NWFP mills can not be attributed alone
to the ban alone as some 100 mills (out of 260 set up in the
Frontier) were out of business much before the ban was
imposed, it played havoc with the remaining operating mills
which, too, experienced complete halt because of stoppage of
wheat from the neighbouring Punjab.
At a time when Islamabad is importing one million tons of
wheat, apparently, to meet the country's flour consumption
requirements, it has let its doors open to see dozens of
trucks loaded wth huge quantity of flour crossing over to
Afghanistan every day. This has left several to raise
eyebrows as the increase in demand, because of growing
exports to Afghanistan, has resulted in rise in prices of
atta in local markets, particularly, in NWFP and Federally
Administered Tribal Areas (Fata).
The price of a bag of 85 kg fine quality flour (white) has
recorded an increase of around Rs 150 per bag during the
last seven months in the local markets, making the owners of
tandoors to put a fresh demand for increase in the
officially fixed price of Roti (dough of bread) ahead of the
holy month of Ramazan.
Interestingly, the exporters do not need to make exports
against dollars. It is the Afghani which Pakistan is earning
against its flour exports to Afghanistan.
Afghan importers bring Afghani from their country, get it
converted into Pakistani rupee in the local currency markets
and make payments to flour dealers in Peshawar. That is how
the business is being carried out at the moment.
Official circles, too, believe that Islamabad's policy to
declare flour as a freely exportable item for Afghanistan
has put under pressure Pakistan's own wheat stocks, making
it to procure one million tons wheat from abroad to meet the
flour consumption requirements.
There is no bar on export of flour to Afghanistan, no permit
required from any of the official agencies and no foreign
convertible exchange is needed.
The Central Board of Revenue is collecting only export
development surcharge on the export of flour at a rate as
nominal as 0.25 per cent, encouraging millers, traders,
exporters and Afghanistan's importers to lift huge stocks
from NWFP's markets. More interestingly, while flour's price
ranges between Rs 13 and Rs 15 per kilogramme in the markets
from Peshawar to Karachi, the CBR is collecting the export
development surcharge by calculating the price of flour as
Rs 10 per kilogramme, according to the customs sources.
Between 40 and 50 trucks, according to official accounts,
loaded with flour bags of 20, 40 and 85 kilogramme each are
crossing over to the other side of the border every day from
the Torkham border crossing.
Exports [of flour] being made from other border crossings is
in Addition. This has encouraged growing business
relationship between Afghan importers and flour dealers who
are making big profits due to bulk supplies being made every
day from different markets of NWFP.
However, for some exporters it is too dangerous and risky to
do business with Afghan importers. In view of the
lawlessness in the war torn country it would be beyond
Pakistani exporters' capability to recover their money from
Afghan importers if they chose to default, as in some of the
case the trade is being made on credit basis. In this way,
the chances of default can never be ruled out.
Besides, the possibility of under invoicing by the exporters
can not be ruled out, even though there was no restriction
on the export of flour to Afghanistan.
Officials say that CBR collects between Rs 500 and Rs 1000
per truck as export development surcharge. But there may be
instances in which exporters resort to unfair means to evade
payment of export development surcharge.
It is believed that flour is being exported in much bigger
quantity than what is declared to customs authorities on
papers by exporters.
In some of the instances, according to market sources, local
atta dealers, supplying flour to Afghanistan, are filling
upto 98 kilogramme flour in a bag meant to contain 85
kilogramme, in a bid to evade export development surcharge.
" This can not be ruled out as we can not weigh every single
bag," said the customs official, adding that " what we do to
check this practice is that we weight the whole vehicle by
putting it on the weighing machine at the Torkham border
crossing".
Though the whole sale markets in NWFP have experienced major
boom during the last few months because of increasing flour
export to Afghanistan, much of the benefit in terms of
financial gains went to Punjab's flour millers.
Peshawar's market receives between 40 and 50 trucks of atta
from Punjab every day, whereas, the figure comes to about
400 trucks when the whole of NWFP is taken into account,
according to market sources.
The growing exports of flour to Afghanistan because of
federal government's free export policy for the war-torn
country has given further rise to demand for Punjab's flour
in the NWFP's markets boasting trade and business
activities.
The situation has undermined the provincial government's
authority to keep prices under control as earlier the
federal government's wheat policy had left it with little
role to influence atta market and flour millers who are now
heavily relying on procurement of wheat from Punjab's open
market - instead of the provincial government. It would not
be wrong to say that presently there is no official
mechanism to control prices of flour in the Frontier
province, which is totally relying on procurement of wheat
from Punjab and the Trading Corporation of Pakistan.
The NWFP food department does collect rates of flour from
the local market every day. But it is only for the sake of
maintaining record. Nothing else beyond that.
There is a need that a fixed quota be determined for exports
to Afghanistan because doing away with the export would not
be in the interest of any body, neither trader, exporters,
millers nor flour consumers.
Traditionally, too, Pakistan has been feeding considerable
amount of flour to markets of the land-locked Afghanistan
However, to protect our own people's economic interest our
planners should revise their strategy and put in place an
elaborate plan to take on the smugglers mafia which may try
to take benefit of the situation, if export is allowed
against fixed quota.
Courtesy :
The DAWN
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Pakissan.com;
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