LAHORE, Oct 15: The Pakistan Flour Mills Association has demanded a “substantial increase” in flour price to compensate the industry for withdrawal of subsidy.

A formal proposal in this regard has been sent to the Punjab government and a meeting convened for Wednesday (today).

According to the proposal, the PFMA (Punjab wing) has asked the government to increase price to the tune of Rs206 per 20kg for twin cities of Rawalpindi and Islamabad; Rs202 for Lahore; Rs204 for Gujranwala, Gujrat and Sialkot and Rs203 for Faisalabad and Sargodha.

The new price, according to the PFMA, is based upon a formula, which, in turn, is calculated on the basis of new ground realities. After the withdrawal of almost Rs1.5 billion subsidy on transportation of wheat and bardana (gunny bags), the new price has been calculated as Rs3 to cover inflation cost, Rs10 to cover transportation cost, Rs4.5 for compensating bardana difference and Rs7 retail profit. All this comes to around Rs24 and this will be in addition to present Rs184 per 20kg. Thus taking the price to around Rs206 for twin cities. Price for the other cities will lessen according to transportation cost, it said.

According to an official of the PFMA, the price increase has been necessitated on two accounts —- withdrawal of subsidy and corruption in the food department —- making it hard for the millers to meet the price. The government has snapped a subsidy of Rs1.5 billion on transportation and gunny bags. The millers will naturally want to pass this burden on to customers. Corruption in the department only accentuates problems for the millers, adding to their financial burden, he insists. Now the millers are only asking the provincial government to compensate the millers for these two additional factors, he says.

An official of the Punjab Food Department, however, denies any possibility of increasing the price. The price will not go up because of, not only policy decision, but also for market forces. At present, though the official price is Rs189 per 20kg. But flour is being sold for Rs184 per 20kg. This provides millers with necessary cushion, if needed.

Currently, the transportation factor, he says, is not affecting the wheat price and the government is not charging any additional cost for wheat issued to meet food security in all the above-mentioned districts. So, it does not provide the millers with an excuse to ask for an increase. The millers are free to purchase additional wheat, if required, from the open market. The alleged corruption in the department, he says, is not new to provide millers with an excuse for a price-hike. It has always been there in one form or another. And corruption is not a one-sided affair. The millers are as involved in it as any one else.