Pakistan opted on Saturday to purchase two million metric tons of wheat from Russia on a cash basis, abandoning a barter trade arrangement, while also approving Rs160 billion in supplemental assistance to assure food, fuel, and electricity supply.
The Cabinet’s Economic Coordination Committee approved Rs62.3 billion extra for fuel subsidy payments, Rs50 billion to eliminate power shortages, and over Rs36 billion for providing targeted subsidies to the poorest families and paying for discounted necessary commodities at Utility Stores.
To encourage suppliers to expedite shipments in June, the ECC temporarily eliminated additional customs taxes on edible oil imports. Miftah Ismail, the Finance Minister, presided over the ECC meeting.
“The ECC approved the import of two million metric tones of wheat from Russia on a government-to-government basis,” the finance ministry said. According to the current agreement, the imported wheat from Russia will be received by the Pakistan Agricultural Storage and Services Corporation (Passco).
Due to Western sanctions, the Ministry of National Food Security requested that the Foreign Office and the Ministry of Commerce work together to investigate the feasibility of barter commerce with Russia.
There are no prohibitions on grain imports from Russia, but the government will need to figure out how to make payments now that Moscow has been kicked out of the global payments clearing system — the Society for Worldwide Interbank Financial Telecommunication (Swift).
The federal cabinet approved the import of three million metric tons of wheat, including one million metric tons, via international open tenders earlier this month.
This year’s wheat production fell by one million metric tones to 26.4 million metric tones, but consumption is expected to be 30.4 million tones. Pakistan is facing a four-million-tone wheat shortfall as world prices rise as a result of the Russia-Ukraine conflict.
As a result, on May 16, the first international tender for the import of 500,000 metric tons of wheat was announced, with shipments scheduled for June-July 2022. According to the bid assessment committee report, M/s Falconbridge Resources submitted the lowest response bid of $515.49 per metric tone.
Domestically accessible wheat costs Rs2,511 per 40kg, or Rs63 per kilo, according to the Pakistan Bureau of Statistics (PBS), however the estimated landed cost at port of imported wheat given is Rs4,618 per 40kg, or Rs115 per kilo, or Rs2,106.88 per 40kg more than domestically available wheat.