July 05, 2007	Thursday	Jamadi-us-Sani 19, 1428

LAHORE, July 4: In spite of record bumper crop of 23.5 million tons this year, the wheat flour price in Punjab is feared to surge further over the next few days owing to high price and shortage of the grain in the market, flour millers say.

Wheat is available in short quantities in the market for Rs480-485 per 40kg, which is 13-14 per cent higher than the minimum support price of Rs425 per maund for the flour mills. The millers claim that they are finding it hard to operate their mills at full capacity because of the artificial shortage created by the hoarders.

“The problem is that wheat is not available in sufficient quantities in the market in spite of its high market price,” former Pakistan Flour Mills Association chairman Khaleeq Arshad told Dawn on Wednesday.

He said the flour millers would be constrained to increase the price by at least Rs5 per 20kg bag from the current Rs270 (a bag) in the next couple of days. That would be because of increasing rate of wheat alone, he added.

The wheat flour price in the retail market ranged between Rs255-262 per 20kg bag only a couple of months ago.

In Sindh, the wholesale flour price has also gone up by 20 paisa in the last couple of days because of higher wheat price in that province.

The millers blame the federal government’s decision to allow export of wheat, which was later withdrawn when reports of surge in the flour price around the country began to pour in, for the rise in the rates of the grain and flour.

As a consequence of the decision, commercial exporters procured wheat in large quantities. “At least 400,000 tons to 800,000 tons of the grain were exported before the government once again slapped the ban on its export. But the damage was done by that time,” said a flour millers’ leader, Ahmad Bilal Sufi.

He said the mills had purchased wheat in very small quantities this year because of high bank interest rates.

Khaleeq said the mills had procured 300,000-400,000 tons of wheat this year compared to 1.2 million tons or more during the previous years. As a consequence, they were now forced to lift the wheat for their operations at higher rates from the open market.

Commercial exporters, hoarders and animal feed producers, according to Sufi, have procured bulk of the grain.

The government is persistent with its decision not to lift ban on the wheat export in order to make the commercial exporters and hoarders bring out their stocks in the market.

“The government will not let wheat to be exported till prices (of the grain and flour) slip back and stabilise to their May level,” federal government’s adviser on finance Dr Ashfaq Hasan Khan told the reporters several days back in Lahore.

However, the hoarders seem to have ignored the warning and continue to raise the price of their stocks by creating an artificial shortage in the market.

Khaleeq said since the prices of other food staples (rice, corn and pulses) were also on the increase, the pressure on wheat consumption was rising. “On the other hand the poor harvest in a number of countries — Australia, United States, India and Iran, etc — has also pushed the prices of this staple cereal very high in the international market.

“Those (commercial exporters) who have procured wheat at Rs435-445 per 40kg now want international price for their stocks and are releasing wheat in the market in short quantities,” he said.

The flour millers said the prices of flour could be prevented from rising further only if the provincial food department started releasing its stocks earlier at cheaper rates.

“This step will send a message to hoarders that the government is serious about wheat flour price stability, and force them to bring their stocks in the market,” said Khaleeq.

Provincial food secretary Ahmad Yar Khan did not receive calls for version. But a food department official told this reporter on the condition of anonymity that the government had no intention to intervene in the market by releasing its stocks at the moment.