Federal government is likely to sell one million tons of wheat at a price of Rs 950 per 40 kg to private parties and the subsidy of Rs 6,045 per ton will be borne by the Finance Ministry, official sources told the Business Recorder. Presently, Pakistan Agricultural Storage and Services Corporation's (PASSCO) wheat stock is 1.75 million tons, including 0.45 million tons from 2009-10 crop and 1.27 million tons from 2010-11 crop. Of these stocks, 0.25 million tons will be released to deficit provinces and World Food Programme (WFP), while 0.5 million tons will be kept as strategic reserves. This leaves PASSCO with a surplus wheat stock of 1.00 million tons. On April 11, 2011, the ECC of the Cabinet allowed PASSCO to sell 200,000 tons of wheat @ Rs.25,000/- per ton plus cost of packing material for export purposes, but no wheat could be exported due to cost differential of PASSCO's wheat and international market price. According to sources, ex-godown cost of PASSCO wheat is Rs 30,845 per ton (equivalent to $ 354.5 in May 2011 and $ 339 today), whereas international (FobGulf) wheat price has oscillated from $ 354 during May, 2011 to $ 296 on March 01, 2012. Ministry of Food Security and Research argues that given the downward trend of international wheat prices disposal of PASSCO's surplus stock through exports may not be the right approach and other avenues must be explored for off-loading the surplus stock before the next crop in May 2012. The sources said that early off-loading of the surplus stock of 1.0 million tons is crucial in view of the following reasons: (i) Operation for procurement of next wheat crop will suffer due to shortage of storage space; (ii) PASSCO procures the entire stocks through borrowing from commercial banks @ KIBOR + 275 - 250 basis points. PASSCO pays Rs.13.395 million as mark up/storage cost per day on this stock and would incur Rs.763.515 million as financial/storage cost, if the surplus stock were not off-loaded till next crop in May 2012. In fact, if this narrow window of opportunity is missed, the availability of fresh stock will push the possibility of selling old wheat to January 2013, by that time the 2009-10 crop may not remain fit for human consumption; and (iii) international estimates show that the world is again likely to have wheat stocks at an all-time high during 2012 and wheat price is unlikely to increase in the international market. The Federal Government has already increased current year support price of wheat to Rs.1050 per 40 kg which will further broaden the price gap between Pakistani wheat price and international market price, making it even more difficult to dispose of surplus stock at a delayed stage.