LAHORE, April 26: The Pakistan Flour Mills Association on Monday decided to increase ex-mill rate of 20kg flour bag by Rs8 and retail price to Rs224.
The association took the decision following increase in market price of wheat and the Punjab government curbs on purchases from the open market.
The mills had been providing flour at Rs208 per 20kg when official release price was Rs350, which is now Rs370 in the open market.
Ban defended: Defending its case of placing inter-district ban on wheat movement, the Punjab government on Monday said that its failure to procure 3.5 million tons of wheat could exert extreme pressure on food security and expose urban population to fiscal manipulation of the private sector.
A Punjab Food Department official said that the induction of private sector in wheat trade had not brought about desired results as another breed of businessmen called 'investor' had jumped into the fray.
"This new catalyst (of trade) has absolutely no connection with the socio-economic situation of the rural areas. Its chief motive is quick profits which, in turn, give way to an artificial boom in market price on the one hand and hoarding of wheat for higher profits on the other.
It has turned the food business into a monopolistic trade and triggered chaos in market through the sheer size of their hoarding," he said. Market sources said the official expectation of a comfortable food market in leaner period crashed when the government panicked into placing orders for 1.5 million tons of wheat import when, according to estimates of the State Bank, private sector was still hoarding 300,000 tons of wheat.
During the whole crisis, the Punjab government not only carried the blame of ineffectiveness and price rise, but also met needs of other provinces. Ultimate sufferer of this affair was urban consumer of the Punjab who ended up buying flour at 40pc higher price than the previous year's.
Precisely for this reason, if the Punjab Food Department failed to procure 3.5 million tons of wheat it would be impossible for it to maintain a balance in the open market.
"This year also, despite reports of better crop by all official agencies, the market took unexpected turn. Aggressive buying by private sector took the crop out of the province at a brisk pace, enhancing fears of repeat of last year's situation.
It was apprehended that the province would go dry in by August if the situation was not retrieved quickly. Liberal and low-interest loaning by the banks only helped worsen the situation," another Food official claimed.
