August 20, 2007	Monday	Sha’aban 6, 1428

LAHORE, Aug 19: The Punjab government may ban wheat release to non-functional mills this season in a bid to control “run-away food inflation”.

Sources in the Punjab Food Department told Dawn on Sunday that wheat release to non-functional mills only led to “hoarding and rise in flour price” which the government would not like to see in the (possible) election year. “It has grown more sensitive to the ill effects of liberal releases.

“These non-functional mills re-sell their quota at a profit of Rs100 per 100kg bag,” an official said, adding that in numerical terms they simply increased flour price by Re1 a kilogram and hoarded wheat in the hope of getting better dividends and rigged the market.

Both these factors might prompt the officials to ban wheat release to non-functional mills, he added.

According to him, “the federal government has already sent such a policy recommendation to the provincial administration which is studying it. Any decision to the effect may take another week or so, but official circles believe that the ban is most likely to be slapped”.

The department also knew that it could be dragged to court over the issue as had happened in the past, but it had already completed its homework and was prepared to plead its case”, another official of the department said.

The most decisive factor going in favour of the decision was food inflation which the government was desperately trying to control, he said.

The official said hoarding and price hike were something no one could defend. The department was of the opinion that those mills, which did not grind anything last year and have no electricity bills, had no right to get wheat this year, he said.

“In fact, all provincial departments have lists of non-functional mills and can easily stop wheat releases to them,” said an official of the Ministry of Food, Agriculture and Livestock (Minfal). The federal government, he said, was determined to block such releases and policy instruction had already been sent to them.

Though the provinces were yet to formally respond to the policy recommendations, oral discussions with them had shown tilt towards imposition of ban. And as Ramazan was approaching and wheat release would start before it, he said, the process should not take more than two weeks.

The provincial government knew that the entire amount of released wheat would end up with the mills that had bigger market share and had to meet the demand. These non-functional mills only prolonged the process by hoarding and made it more expensive by earning margin on the released wheat. The government could earn more by releasing wheat to the efficient mills and keeping a lid on flour prices, according to him. —Ahmad Fraz Khan