KARACHI, Sept 28: The city government is going to fix the retail price of wheat flour this week, which it would monitor throughout Ramazan.

DCO Mir Hussain Ali has convened a meeting of flour millers, wholesalers and retailers for Thursday to discuss the price structure of wheat flour.

The Sindh Food Department has already made it binding on the flour mills to sell wheat flour at an ex-mill rate of Rs12.50 per kg. Under the rules, the provincial government cannot fix the wholesale and retail prices of flour. So, the meeting convened by the DCO will do this job.

Senior officials in the city government privately say they will have no objection to it if the retailers sell flour at Rs13.50 per kg, but the Sindh Food Department is of the view that the retail price of flour should not be more than Rs13 per kg.

Aftab-ur-Rehman, general secretary of the Karachi Wholesale Grocers Association, said if the wholesalers got wheat flour at Rs990 per 80 kg from the millers. "We are willing to sell it for Rs1020." This means the wholesalers are looking for a margin of 30 paisa per kg.

Farid Qureshi, general secretary of the Retailers Grocers Group, said the retailers would add another 70 paisas to the ex-mill price of wheat flour. "If the wholesalers sell an 80kg bag at say Rs1020, it won't be unfair for us if we sell flour at Rs13.50 per kg."

But sources close to the Karachi Retail Grocers Group said if the city government asked them to sell flour at an even lower price, say Rs13 per kg, during Ramazan the group would voluntarily accept this demand.

With such a strong indication coming from inside the group and with the Food Department holding the view that the retail price of flour should not be more than Rs13 per kg, the city government may ask the retailers to sell flour at this price, at least during Ramazan. But flour millers say they will give conditional assurance to the city government to sell flour at an ex-mill price of Rs12.50 per kg.

"If we get more of subsidized wheat from the Food Department in October, only then we will be able to sell flour at Rs12.50 per kg," said Sheikh Akhtar Hussain, a former chairman of the Pakistan Flour Mills Association.

The millers had taken the same plea at a meeting with Sindh Food Minister Arif Mustafa Jatoi last week. But Mr Jatoi had asked them to first lower the ex-mill price to Rs12.50 per kg before looking for any increase in supply of subsidized wheat.

For September 2004, the 70-plus Karachi-based flour mills received a quota of 40,000 tons of subsidized wheat. They are looking for at least 50 per cent increase in it in the month of October. But it is not clear if the department will allow this much increase.

Subsidized wheat costs the millers about Rs10 per kg which also includes the packaging charges. This is substantially lower than the open market price of around Rs11.55-Rs11.60 per kg.

Meanwhile, wheat from Punjab has started trickling into the local market, thereby lowering local wheat prices and helping millers in selling wheat flour at Rs12.50 per kg.

"The arrival of Punjab wheat has started, though in small quantities," said Sheikh Akhtar Hussain. A 100kg bag of wheat that was selling for Rs1,200 in the open market about a week ago is now selling for Rs1,155-Rs1,160 as growers from Bahawalpur, Rahimyar Khan and Sadiqabad have managed to transport wheat from Punjab to Karachi.

Flour millers say the price will fall further as inflow of Punjab wheat picks up pace in the coming days and a ship carrying 40,400 tons of Russian wheat starts discharging the commodity.

This is the second batch of imported wheat that has arrived during this month. Earlier, on Sept 12, Pakistan imported the first batch of 40,000 tons of Russian wheat. The fall in wheat prices in the open market has helped the millers reduce the ex-mill prices from as high as Rs13.25 per kg to Rs12.50 per kg.

"Almost all millers have started selling 80kg bag of wheat at Rs990," claimed Mr Hussain. A couple of days ago some of them were charging up to Rs1,060 per bag of 80kg.