KARACHI, July 7: The speculators, hoarders and profiteers have consolidated their position in the wheat and wheat flour market to manipulate it their way and reap rich profits as people in parts of Sindh, Balochistan and NWFP struggle to save whatever their belongings are from the effects of flash floods.

The government unmindful of the miseries of the rain affected people is wholly engaged in Lal Masjid episode and assessing a fallout of multi parties assembly in London this week.

Prices of wheat and wheat flour are crawling up in all parts of the country. Wheat flour price in Karachi has now gone up to Rs18 a kg on Saturday. But there are no signs of government intervention.

When Federal Food Minister Sikandar Hayat Khan Bosan was reached by cell phone on Saturday noon, he regretted to talk as he was in a meeting with the Punjab chief minister.

The food adviser in Sindh government Ghulam Murtaza Jatoi was away in his village. Top bureaucrats of provincial food department were either not available or they refused to offer any comments.

Consumers have now been left at the mercy of the market manipulators who are whispering rumours that the official assessment of wheat crop at 23 million tons has proved wrong and the government may be forced to import wheat in next few weeks.

Ramazan is now hardly eight to nine weeks away. Market reports on Saturday revealed that prices of maida (fine flour) had jumped up to Rs1,320 per 100 kg, which is forcing bakery owners to have a fresh look at the prices of their products.

“There is more than 200,000 tons of wheat stock in Karachi with the traders and millers on Saturday but prices shot up from Rs1,190 for 100 kg about two weeks ago to Rs1,280 on Saturday,” disclosed an analyst and a close watcher of the wheat market.

He said that after government’s decision to suspend wheat export, about half a dozen known traders stocked grain in various warehouses to curtail its supply in the market and to push up prices. There are 78 flour mills in Karachi and more than 50 are said to have large stocks of wheat.

“Millers normally maintain wheat inventory of two to three months for crushing in their factories,” confided another knowledgeable source who said there was apparently no reason of wheat prices going up except profiteering and expectations of traders to make further gains in days to come.

Market analysts attribute the present crisis in wheat market to the confusion created by the Federal Food Minister Sikandar Hayat Khan Bosan who in anticipation of a bumper wheat crop persuaded the government to allow export from the old and new crop.

The State Bank of Pakistan, in its annual report for 2005-06 released on December 2, 2006, had advised the government to build up strategic wheat reserves of five million tons plus before allowing wheat export.

It had warned in clear words of the role of speculators, hoarders and profiteers, who would take all the advantage if there was no strategic reserve available with the government.

The situation developed exactly the way the State Bank had predicted and there was a panic in wheat market in the month of May when it should normally see a glut of wheat, especially when official estimate of crop was 23.5 million tons and even 24 million tons.

Isolated and alienated from the market and public, the government in a sheer panic suspended the wheat export.

This decision has created more confusion as traders still hope of resumption of wheat export and went ahead with their buying spree, which adversely affected official wheat procurement programme.

About half a dozen well-known traders are said to have suffered because of abrupt suspension of wheat export and are keen to deliver consignment to their buyers or manipulate the local market to curtail supply and push up prices.

“The government should have decided to put a complete ban on wheat export in July 4 meeting with traders and millers at Islamabad,” Dr Masroor, the Special Wheat Commissioner said in response to a query from Dawn. He agreed that the suspension of export was a tentative decision which had created confusion and the current turmoil.

“There is absolutely no shortage of wheat in the market,” the wheat commissioner made it clear to point out that the harvest was of more than 23.5 million tons in the current season. He was confident that at the end of the season next March, the country will have about two million tons surplus wheat as carryover stock.

His argument was that the entire rural population - that is 67 per cent of the country - are well stocked with wheat. The problem is for 33 per cent urban population for whom there is sufficient quantity of wheat.

Dr Masroor said that the government had five million tons of strategic reserves which were a sufficient cushion to meet any eventuality and apparently there should be no problem of wheat supply and prices by March next when harvest will begin.

The government is still indecisive on fixing the issue price of wheat from its stocks. Millers are given wheat from government stocks on issue price which partly covers the financial cost and handling charges.

There is some subsidy in issue price to ensure availability of wheat flour to urban consumers at affordable prices. The government normally start releasing wheat from its stocks in August or even September to maintain a steady supply for next six months up to March.

But market analysts say that there is a general shortage of wheat in the world market and in the neighbouring countries, which are India, Iran and Afghanistan. The price difference of wheat in Pakistan with these countries is too big and is tempting for smuggling.

While monitoring borders to prevent wheat smuggling is a job of the government, analysts say it is also government’s responsibility to ensure unhindered supply of wheat at affordable prices, particularly when the harvest is rich.

State Bank has predicted that the benefit of high wheat prices will be reaped by only speculators and neither the grower nor the consumer will benefit.