Ban on direct procurement of wheat behind rise in prices

The flour prices were steadily increased in wholesale and retail markets during last couple of weeks, while the flour millers in Khyber Pakhtunkhwa and wholesalers blamed the imposition of ban on direct purchase of wheat from private sector, food department and open markets by the government of Punjab, was only reason for upward trend in the prices in the province.

A survey conducted by Business Recorder here on Saturday noted that prices of all ranges of flour have registered an increase from 25 to 30 percent in the preceding weeks. It was noted that price of special flour (bronze) weighting 20 kg bag has been increased from Rs 670 to Rs 720, while super fine flour (atta) is being sold at Rs 720 against the previous rate of Rs 680 per 20 kg bag. Similarly, the price of 85 kg bag also goes up with increase of 25-30 percent in the wholesale and open markets.

"We are totally dependent on release of wheat from Punjab, as millers were procured 90 percent wheat from there," said Naeem Butt, Chairman All Pakistan Flour Mills Association (APFMA), Khyber Pakhtunkhwa. He informed that the flour prices had steadily increasing due to imposition of ban on millers from directly procurement of wheat by Punjab.

APFMA Chairman further informed that government of Punjab had fixed quota for its flour mills after availability of surplus stock of wheat and flour. Currently, he said about three to five million metric tons wheat available as surplus of the total of stock of 0.9 million metric tons wheat in Punjab. While, he said the Punjab government had imposed ban on KP flour mills to not purchase directly from food authorities, private and open markets.

Abbasi said the government of Punjab had also used manipulative tactics by fixing additional quota for its flour mills, due to which prices was surging with every passing day in the KP. Butt cautiously said that the new policy of Punjab government had caused the abrupt increase of flour prices in the KP province.

Whereas, he said the government had recently increased the wheat support prices from Rs 250 to Rs 250 per kg, according to which Rs 3-4 per kg would be increased. He said the flour was being supplied in a larger quantity from Punjab to KP province. When asked about the smuggling of flour, the provincial Chairman APFMA defended that there was no question about smuggling of flour from KP as mills had received only 90 bag quota per day weighting 100 kg. It could not be possible to smuggle flour in existing limit fixed in the KP, he added.

In the coming wheat procurement season 2013-14, Butt informed, prices of flour would further go up in the country after new prices fixed by Economic Co-ordination Committee in its last meeting raised the support price for wheat by Rs 150 per 40 kilograms to Rs 1200, up by 14.3 percent over the existing price of Rs 1050 per 40kg.

When asked about any shortage of flour in coming days, the provincial Chairman said the situation was totally different in KP and Balochistan provinces as compared to Karachi, adding that both provinces were totally dependent of Punjab province for procurement of wheat and flour.

"About 22 metric tons of wheat was available with Pakistan Agriculture Storage and Service Corporation Limited for current season, if the government of KP demand, it could not be difficult to get required quantity of wheat from the Passco, APFMA President informed.

Copyright Business Recorder, 2013