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Hope for crisis-hit US farmers as Pakistan buys 300,000 tonnes of wheat

Within hours after the United States had exempted its farm products from the nuclear-related economic sanctions, Pakistan entered the US grain market in a big way, buying 300,000 tonnes of wheat, some 150,000 tonnes more than it had orginally announced.

US President Bill Clinton, in a radio address yesterday, welcomed the Congressional action in freeing US farm exports from the economic sanctions his administration had imposed on India and Pakistan after their May nuclear tests.

He said, ''I'm pleased that this week, Congress took prompt bipartisan action to exempt agricultural trade from US sanctions against India and Pakistan in the wake of their nuclear tests.''

The Bill, which the President had already signed into a law, intends to help American farmers who are suffering due to a sharp decline in wheat prices. But for this relaxation in sanctions, they would not have been able to sell their grain to Pakistan, one of the major importers of US wheat in the world.

A Pakistan embassy spokesman said that Islamabad had doubled the quantum of wheat purchases partly to compliment the US farmers for their efforts in getting the sanctions relaxed and partly to capitalise on the rock bottom prices.

The US and Australian companies quoted wheat prices, ranging from $ 99 to $ 102 per tonne and officials said freight rates from both US and Australian ports were also low, $ 17 per tonne from the US and $ 12 from Australia.

In all, Pakistan bought half-a-million tonnes of wheat, some 300,000 tonnes from the US alone, though the Australian wheat works out cheaper because freight cost is less by $ 5 per tonne. It contracted 200,000 tonnes from Australia.

The shipping is scheduled to take place from the US and Australian ports between August 1 and 20.

At an average cost of about $ 112 per tonne, Pakistan would utilise about $ 32 million from its available credit of $ 88 million under the US Commodity Credit Scheme. The remaining $ 56 million would be available until October.

Clinton, in his radio address, also announced the steps his administration is contemplating to provide relief to the wheat-growers affected by the fall in prices.

A combination of factors, including drop of demand for grain because of the Asian financial crisis, has pushed US prices down by more than one-third within a matter of a few months and brought many US farmers close to bankruptcy, according to reports.

Clinton said he was using his executive powers to have the agriculture department begin buying 2.50 million tonnes of wheat, costing about a quarter billion dollars, within next few weeks.

The action is expected to produce an immediate jump in grain prices. Clinton said the surplus wheat would be used to launch a new US food-aid initiative to support the world struggle against hunger.

UNI