LAHORE, Jan 28: Three former chairmen of the Pakistan Flour Mills Association on Friday criticized what, they said, U-turn in the deregulation policy for wheat procurement.

Speaking at a press conference, they claimed that the State Bank had asked commercial banks to stop commodity finance in the next season. "These instructions fly in the face of official policy of deregulating wheat procurement."

The deregulation policy was initiated by Shaukat Aziz when he was finance minister. They said the State Bank seemed to have devised its own policy now. First, it increased ratio of cash margin from a 90-10 per cent to 50-50 and then asked all the loanees to return commodity finance within a particular period.

Now it had instructed all commercial banks to avoid commodity finance in the wheat next season, they added. They said there was no justification for taking such actions, especially when the country was expecting healthy crop this year. Last year, the country had only 18.5 million tons of wheat, but this year it is expected to rise up to 20.5 million tons.

In these circumstances, they said, stopping commodity finance would amount to financially hurt millers and farmers, who could not hold such a substantial quantity of wheat with them for long.

"If the millers are not financed, the whole crop would go in the hands of investors who can later hold it and manipulate market as they had been doing in the past," they said.