Flour millers warned of open tendering: Subsidized wheat
By Mohiuddin Aazim
KARACHI, Sept 14: Sindh Food Department has warned Karachi-based flour millers that if they fail to bring down the ex-mill price of wheat flour to Rs12.50 per kg, it may call open tenders for releasing subsidized wheat.
The warning was issued by Food Director of Karachi Region Dr Tanveer Qureshi at a meeting with the millers held on Tuesday. Sources privy to the meeting said Dr Qureshi made it clear to the millers that if they fail to lower the ex-mill price of wheat flour to Rs12.50 per kg, the department would stop releasing subsidized wheat across-the-board and float open tenders for this purpose, instead.
The sources quoted him as saying that the department would start issuing wheat to the mills that would quote the lowest ex-mill price of wheat flour out of the subsidized wheat to be provided by the department.
Naturally then, the mills left out in this process would have to buy the grain from the open market at higher prices and they would not be able to compete with those getting subsidized wheat.
The sources said that the millers assured the Food Department that they would now sell wheat flour at an ex-mill price of Rs12.50 per kg to avoid open tendering of subsidized wheat.
But they asked the department to supply them more of subsidized wheat not only during this month but in future also. The sources quoted Dr Qureshi as saying that if the millers started selling wheat flour at Rs12.50 per kg the department might give them an additional 10,000 tons of the commodity this month.
Initially, the department allocated 40,000 tons wheat for 70 plus Karachi flour mills for September but the millers say this is much lesser than their actual requirement.
As a result, they have to buy wheat from the open market at a higher price that raises their cost of production making it too difficult for them to lower the ex-mill price to the level being desired by the Food Department.
According to the data released by the Federal Bureau of Statistics on Monday, retail wheat flour price averaged at Rs13.82 per kg in August across Pakistan, up from Rs13.80 in July. But in Karachi, where prices of almost all commodities remain higher than in other parts of Pakistan, wheat flour is currently selling at Rs14-15 per kg.
Flour millers admit that the ex-mill price of an 80kg wheat flour bag is currently around Rs1060 or Rs13.25 per kg but they claim that they would reduce it to Rs1,000 or Rs12.50 per kg from Wednesday.
"We have assured the Food Department to do that immediately," said Naeem Ahmad Khan, Vice Chairman of All Pakistan Flour Mills Association. Talking to Dawn he said the millers were already selling wheat flour packed in 10-kg bags at Rs12.50 through 400 stalls set up for this purpose. "We have provided the list of these stalls set up across the city to the Food Department officials and they have checked the prices."
Food Department officials had told Dawn a couple of days ago that they would make the list of these stalls public through newspapers. An official reiterated on Tuesday that the plan had not been shelved and the list would be published soon.
Meanwhile, Sindh Food Department has started receiving its share of 15,000 tons in the first wheat import consignment of 40,000 tons that reached this weekend at Port Qasim.
An official said the department would be providing the imported wheat to the millers along with domestic wheat. He said the imported wheat, of Russian origin, would be given to the millers after mixing with the equal quantity of domestic wheat to keep the quality of wheat flour intact. Millers say if the imported wheat is grinded without mixing it with the local wheat the quality of wheat flour would deteriorate.
