January 29, 2013
Retirement of wheat financing by government procurement agencies is on slow track as only an amount of Rs 70 billion was retired during the first half of current fiscal year while Rs 285 billion are still to be paid by these agencies. Sources told Business Recorder on Monday that followed by slow offloading of wheat stocks, the government procurement agencies are facing difficulties in retiring wheat financing amount mainly obtained during the last procurement season.
“Wheat procurement agencies are unable to offload their stockpiles in the domestic market, resulting in delay in repayment of advances obtained from banks against the wheat grains,” they added. When the new wheat procurement season is going to start soon, the government agencies still have to pay an outstanding amount of Rs 285 billion under wheat financing, they pointed out.
The government procurement agencies – Pakistan Storage and Supply Corporation (Passco), Food Department of Sindh, Balochistan, Khyber Pakhtunkhawa and Punjab, every year obtain billions of rupees wheat financing from banking industry for wheat procurement to maintain strategic stocks for the domestic consumption.
However, it has been witnessed that offloading of these stockpiles is on slow track and although there is massive demand of wheat grains in the domestic market, the government agencies are releasing limited stocks. Wheat price in the domestic market has already reached higher level of Rs 3,500 per 100-kg bag in domestic market, however yet Passco and provincial food departments are not releasing wheat stocks in bulk quantity.
Sources said the new procurement season is also going to start next month and before new procurement wheat procurement agencies are required to offload old stockpiles. In Sindh region, new wheat crop will be arriving by the end of February and accordingly, wheat procurement by Sindh Food Department may start from March 15, 2013, while in Punjab wheat procurement is likely to begin in April 2013.
On the other hand, Passco still have wheat stocks of 2.2 million tons, Punjab Food Department some 2.1 million tons and Sindh Food Department 0.7 million tons. The remaining two provinces, ie, Khyber Pakhtunkhawa and Food Department of Balochistan have limited wheat stocks.
Cumulatively, some Rs 69.759 billion have been retired by all the wheat agencies during the first half of current fiscal year, however still billions of rupees outstanding of wheat financing are due. As on January 4, 2012, the outstanding amount under wheat financing stood at Rs 285.13 billion compared to Rs 354.89 billion as on Jun 2012, depicting a decline of 19 percent.
During the period under review, major retirement of wheat financing was witnessed from Punjab Food Department, however still it has a huge share in total outstanding amount. Punjab Food Department has a share of 46 percent in total outstanding amount. Wheat outstanding of Punjab Food Department fell to Rs 131.39 billion in January 2013 from Rs 181.186 billion in June 2012, registering a retirement of Rs 49.796 billion in first half of current fiscal year. Passco”s outstanding amount is still on increase as it has to pay an amount of Rs 98.66 billion as on January 4, 2013 compared to Rs 98.27 billion as on June 29, 2012.
With a retirement of Rs 14 billion, outstanding amount of Sindh Food Department stood at Rs 35.683 billion down from Rs 49.614 billion. Similarly, outstanding amount of Food Department Khyber Pakhtunkhawa and Balochistan fell from Rs 8.531 billion and Rs 2.81 billion to Rs 2.5 billion and Rs 1.724 billion, respectively. The TCP is also unable to pay Rs 15 billion of wheat financing.