LAHORE, March 3: The Pakistan Flour Mills Association (PFMA) on Wednesday increased the price of a 20kg bag of flour by up to Rs7, claiming that this was unavoidable after the recent raise in the wheat price by the provincial food department.

The PFMA officials announced that the ex-mill rate would range between Rs208 and Rs210 for a 20kg bag and retail prices between Rs215 and Rs217 per bag. The Punjab food department has recently increased the wheat price from Rs340 to Rs350 per 40kg bag

The millers hold the department responsible for increase in flour rates, but hope that the retail price will remain stable around Rs220 provided the department maintains a smooth supply of wheat to the millers (at least at the current supply level).

"The PFMA is now getting 20,000 tons of wheat daily at Rs350 per maund against the previous price of Rs340 per 40kg," claimed an official of the association.

He added that the department had made a Rs2.4 billion profit in the wheat business this year, which was bound to raise the flour price. Increase in the flour price was the policy of the government.

"Last year the department incurred a huge loss in wheat trade, but within an year it has started earning hefty profits. Instead of passing on any relief, it has started burdening the consumers," he added.

He claimed that the PFMA supplied on Wednesday 20,000 flour bags in the city. The price of 20kg bag under the 'Sasta Atta Scheme' would be increased from Rs170 to Rs177 from today (Thursday).

Meanwhile, the flour was available in the city markets between Rs218 and Rs225 per 20kg bag. Loose flour was selling up to Rs13 per kilogram in retail markets.

The market insiders feared that the prices were bound to go up following cut in wheat quota to the mills by the department in the next couple of days. According to sources, the Punjab food department has around 0.7 million tons of wheat in stock and the decrease in wheat quota to the flour mills will be necessary to carry the stocks till the arrival of new crop by middle of next month.

The department is currently supplying 20,000 tons of wheat to the flour mills daily, which is likely to be reduced by 3,000 to 5,000 tons during this week, they added.

The department, however, claimed that increase was necessary to avoid any market distortion. "If the department continues supplying it at Rs340, people can buy it from the department now, keep it for a month and resell to the department at a profit of Rs10 per 40kg."