LAHORE, Oct 16: The Pakistan Flour Mills Association (PFMA) on Wednesday withdrew its demand that flour price should be increased, deciding that it would submit the proposal at a more appropriate time.

The millers made this decision after a meeting with the provincial food secretary. Earlier, on Tuesday, they had demanded an increase of over Rs15 per 20kg of flour as compensation for withdrawal of government subsidies on transportation and storage charges.

In a press statement on Wednesday, the PFMA eulogised the new wheat-issuing policy, which it had criticised on Tuesday. “The new policy would benefit everyone and must be implemented in totality,” it said.

Currently, no proposal for increase in flour prices is under consideration, it said and added, the price would be left to market forces rather than a government decision. The millers are presently concentrating on exporting surplus wheat and flour in the market, it claimed.

An official of the Food Department had this to say about the PFMA demand: “In fact, the entire proposal was unreasonable. The millers had asked the department to compensate them by at least Rs10 per 20kg bag for withdrawal of transport subsidy alone, ignoring the fact that they would not have to pay transportation charges this year. The millers realised their mistake and withdrew the proposal.”

As far as compensation for gunny bags is concerned, a bag costs the millers Rs20 per 100kg, which means Rs4 per 20kg. However, the millers were asking for a price increase of Rs4.5 per 20kg on this account. When this glaring inconsistency was pointed out, the millers decided to withdraw the entire proposal, he claimed.

The new policy has devolved the control over flour price to the district government. The DCO would decide the flour price according to supply and demand in the district. The government only maintains supply to meet food security. In these circumstances, it is ambitious on the part of millers to expect that the provincial government would fix a uniform flour price, he insisted. The millers must realise that price cannot be artificially raised in a market economy. If millers in one district increase the price unreasonably, flour would pour in from the neighbouring districts and correct the market aberration, he added.

There is some logic in the demand for compensation on account of withdrawal of subsidy on gunny bags. However, compensation could only be made by the provincial chief executive because it would involve money to the tune of Rs500 to 600 million. Such a big decision, he maintained, could not be made at the secretary level.

Stocks of 3.7 million tons in the province could hardly allow any increase in price. The millers are just trying to find excuses to increase price unreasonably, he claimed.

The millers however said they had only postponed the proposal, as there was no immediate crisis necessitating a price increase. A spokesman for the PFMA said the millers did not want to increase the price unnecessarily and would let the market forces dictate the price.