THE flour prices are rising countrywide since the outset of Ramazan, however, its major impact falls on the NWFP which is heavily dependent on supplies from Punjab.

A survey of the NWFP market shows that prices of flour has witnessed almost 40 per cent increase just a day before the commencement of Ramazan which negates the government claims of countering price hike of essential food items.

The price of 20-kilogramme flour bag in local markets jumped up from Rs270 to Rs380 on the first day of Ramazan.

Consumers in the NWFP had always borne the brunt of wheat or flour crisis, whether it was of 1996-97 or the prevailing one, because the province grows hardly 10 per cent of its requirement of wheat.

The dealers bring refined flour from Punjab mills, with an inbuilt disparity in its prices. If the price of 20kg flour bag in Punjab is Rs290, it could be around Rs300-Rs310 in the NWFP.

The most worrying aspect of this whole business is that the government has failed to check prices and the dealers determine the prices.

While justifying their stand, the dealers argue that they only add on transportation charges to the actual price and earn nothing more than that.

But their claim was proved wrong when the NWFP Chief Secretary, Sahibzada Riaz Noor paid a surprise visit to the local grain market last week. It was revealed that the dealers were earning Rs50 to Rs55 per 20kg per bag. None of the dealers could produce invoices of flour stock that they had procured from Punjab.

The NWFP flour mills industry does not cater to the local market. Sources say that most of the flour locally produced is exported to Afghanistan, where the millers get better price.

Muhammad Naeem Butt, the provincial chairman of All Pakistan Flour Mills Association, attributes price hike and growing dependence of local consumers on flour from Punjab to ‘indifferent’ attitude by the Frontier government.

According to him, the government has cut down wheat supply from its reserves mainly to save subsidy that it incurred on bringing wheat stock from Punjab. He says in 1999, the government had been issuing 1.5 million tons per annum to the local flour mills, which now has been dropped to 0.250 million tons.

Currently, a mill is hardly given 70 wheat bags of 40kg that could be milled within two or three hours, while the floor mills remain closed for the whole day--- that is not economically feasible for the owners, he argues.

Mr Butt explains the price of wheat lifted from official stocks is Rs1215.50 per 100 kg,. In the open market it is more than Rs1550. If the local mill owners bring wheat from Punjab, their cost of production will increases and they even cannot compete with prices offered by the Punjab flour mills.

At present, he claims, hardly 125 flour mills are running and more than 150 are closed just because of less than required releases of wheat stock by the provincial government.

He, however, concedes the flour mills in NWFP produce flour not for the local markets, but for export to Afghanistan.

Like previous years, both the federal and provincial governments have announced provision of flour to the consumers during Ramazan on subsidised rates, but such steps are cosmetic.

The federal government is providing 20kg flour bags at the rate of Rs260 through its utility stores, but a major portion of population even in urban parts of the NWFP is unable to benefit from the scheme because of lower than the required supply of flour.

Syed Mehtab Binori, Regional Manager of the Utility Stores Corporation (USC), explains: “Price spiral of flour in open market puts extra burden on USC outlets and makes availability of sufficient stock near to impossible. Currently more than 100 utility stores operating in Peshawar are issuing 10,000 flour bags of 20kg to consumers, whereas actual demand is more than 30,000 bags a day.”

Likewise, the provincial government has announced distribution of 1.5 million bags of 20kg in the province during Ramazan at the rate of Rs250. But the maximum relief cannot be provided because of limited supply of subsidised flour.

Interesting part of the ongoing price spiral is that there is no paucity of flour in the local market. It is profiteers and hoarders who fix the prices.

The prevailing crisis also raises questions about accuracy of government estimates of wheat crop. At the outset of wheat harvesting season, the government announced an estimated 23.5 million tons bumper wheat crop for this year, almost two million tons more than the domestic requirement. Now it has revised the estimates downward to 22.2 million tons.

If the official crop estimates were correct, the prices should not have witnessed such a surge ahead of Ramazan.

The government has also failed to stop hoarding and manipulation of wheat and refined flour prices in the market as well as its smuggling to Afghanistan, India and Central Asian Republics (CARs).

Some officials hold the view that redefining the role of district administration in price checking, revision of wheat policy by the provincial government and authentic data collection can help in overcoming the recurring wheat crises.