Wheat supply: Govt refuses subisidy as cash constraints bite

If the subsidy is provided, the Finance Division will be required to release $210,000 (Rs22.743 million) to bridge the $35 per ton gap between Passco’s cost price and WFP’s offered price. PHOTO: FILE

ISLAMABAD: 

The federal government has refused to provide subsidised wheat to the World Food Programme (WFP) for distribution among earthquake victims following opposition from the Ministry of Finance because of financial constraints caused by swelling power subsidy, sources say.

WFP had expressed the desire to purchase 6,000 tons of wheat at $310 per ton to assist the people affected by the quake in Balochistan. The offered price was $35 less than the cost price of the Pakistan Agricultural Storage and Services Corporation (Passco).

A 7.8-magnitude earthquake had struck Balochistan on September 24 last year, killing at least 348 people and affecting over 300,000. Awaran and Kech districts were the hardest hit, with 21,000 houses reportedly damaged and the communication system disrupted in the remote and sparsely populated areas.

WFP will bear the cost of wheat, which will be consumed locally. If the subsidy is provided, the Finance Division will be required to release $210,000 (Rs22.743 million) to bridge the $35 per ton gap between Passco’s cost price per unit and WFP’s offered price.

Earlier, participants of a meeting, held on January 8, had sought approval of the Economic Coordination Committee (ECC) for the sale of 6,000 tons of wheat from Passco’s stock to WFP at $310 per ton for meeting food needs of quake-stricken people.

They pointed out that the Ministry of National Food Security and Research had been supporting WFP’s humanitarian assistance programme for the last many years.

However, according to sources, the Ministry of Finance did not agree on giving wheat subsidy due to financial constraints. It argued that the country was already encountering financial hurdles because of pressure from power subsidy and said it was not in a position to offer more concessions.

Praising efforts of WFP to support the humanitarian food aid activities in Balochistan, the ECC suggested that WFP should purchase wheat without seeking any subsidy at $345 per ton, which should be adjusted in accordance with the funds earmarked for the purpose by the organisation.

WFP has also been engaged in other humanitarian efforts in the country. Following devastating floods in Sindh and Balochistan, it has provided emergency food and nutritional support to some three million victims since August 2011.

In January 2012, WFP moved to the early recovery stage of the operation, providing livelihood support through food and cash-for-work to about two million affected people