July 07, 2007	Saturday	Jamadi-us-Sani 21, 1428

LAHORE, July 6: Taking a cue from the surging international wheat prices on account of tight global supplies, traders in Punjab have increased the rate of the product to around Rs495-500 per 40kg, pushing the retail price of flour to all-time high of Rs280 per 20 kilo on Friday.

Millers said the flour prices were shooting up not because of any competition within the industry, but because of the rising rates of the commodities in the market.

“In May when the mills were purchasing wheat from the market at around Rs425 per 40kg, the ex-mill rate of a 20kg bag of flour was Rs250 and its retail price stood at approximately Rs260. Now the wheat price has gone up sharply by Rs70-75 per 40kg, but we have increased our price by only Rs20-21 per bag,” former Pakistan Flour Mills Association (PFMA) chairman Khaliq Arshad told Dawn.

He said the flour prices in Sindh and other two smaller provinces had already shot up to approximately Rs300 per 20kg bag.

The traders, who purchased wheat from farmers at Rs425-435 per 40kg, say they are still selling their stocks far below its international price. “India has received bids for its one million ton import tender at a price ranging from $318 to $360 per ton. If we convert it into Pakistani currency, the price offered by the exporters in response to the Indian tender range between Rs770 and Rs870 per 40kg, which is far above the rate at which we are selling the product at the moment,” said a trader on the condition of anonymity.

The flour price has shot up in Punjab by Rs20 per 20kg bag since May levels of Rs260 or so per bag before the government allowed export of wheat in view of its bumper output this season, a decision which made the commodity traders to purchase the grain in bulk.

“The major reason for the traders to enter the wheat market this year was to export the product and cash in on the opportunity offered by the widening gap between its domestic and global prices,” the trader said.

The government says it will not lift the ban on wheat export as long as the flour price in the domestic market falls back to its May levels.

The millers insist that the only way for the government to arrest the ever increasing wheat and consequently flour prices is to release its own stocks at around Rs460 per 40kg.

“That will send a message to the traders and hoarders, and they will be forced to bring out their stocks in the market in larger quantities and at lesser rates,” maintains Khaliq.

But the government does not seem to be in a mood to start early release of its stocks. “If the government begins to release its stocks today, it will lose its leverage to control the flour price towards the end of this year and in the first quarter of 2008 when the supplies can tighten before the next harvest,” a Punjab food department official told this reporter.

Currently, the Punjab government has stocks of 2.6 million ton this year against last year’s 3.9 million tons during the same period.

“In case the government does not start releasing its stocks to the mills, the wheat and flour prices are certain to rise further in the coming weeks if not in days,” warns Khaliq.