April 01, 2008	Tuesday	Rabi-ul-Awwal 23, 1429

LAHORE, March 31: The price of wheat flour in the Punjab is estimated to spike, roughly by Rs4 per kg, in the second half of April when new wheat crop hits the market due to increase in its official procurement price to Rs625 per 40kgs from Rs510. The last year’s procurement price was Rs425.

Federal Finance Minister Ishaq Dar had insisted here on Sunday that the government would not let the flour price rise in spite of an increase of Rs200 per 40kgs in the procurement price over last year’s price of Rs425.

He had stated that the government would take administrative measures to control the flour price to protect the poor and the vulnerable.

The new coalition government is yet to formulate any concrete policy to ensure that wheat flour prices do not shoot up, like last year.

“The government can maintain flour prices at the current level only for another couple of months. Once it stops issuing wheat quota to flour mills (at the current rate of Rs465 per 40kgs) after the arrival of the new crop, the mills would be forced to raise prices by at least Rs80 for a 20kg bag to Rs370 to Rs375 (ex-mill) for covering the increase in the wheat price in the open market,” a leading flour miller, who asked not to be named, told Dawn on Monday.

He said the new flour price would depend on the rate at which mills got wheat from the market.

“I suspect that we shall have to pay more than the official price to purchase the grain from the market as commodity traders and speculators are already offering above Rs650 per 40kgs to growers in view of the very high global wheat rates.

The flour price could rise above Rs4 per kg if mills had to pay more than the official price to get wheat,” he said.

He said it amounted to what he called as a political stunt to claim that the government could maintain the flour price at the current level even after raising the minimum wheat price.

“Even the government will be charging a higher price for wheat when private stocks get exhausted and official wheat is released to mills towards the end of the year,” he said.

Mr Dar could not be reached on Monday for his comment despite repeated attempts.

The government has raised the official price on concerns that the provincial food departments of Punjab and Sindh and Passco would not manage to procure five million tons of wheat this year because of the growers’ rejection of the previous price of Rs510 per 40kg.

The growers argued that it was not feasible for them to sell their produce at that price because of sharp increase in the cost of production on account of rising fertiliser prices and escalating international market.

The Food and Agriculture Organisation had stated in one of its report that global wheat prices had grown by 83 per cent in one year from January 2007.

Sindh had taken a lead in urging the federal government to revise the official price to Rs600 per 40kgs as its food department failed to procure the commodity in the lower parts of the province where the harvest began in February.

Sources in the Ministry of Food, Agriculture and Livestock say that the Punjab government, which has been given a target of procuring three million tons of wheat this year, did not “officially” support Sindh’s demand.

Punjab Food Department’s Director Waseem Mukhtar said that the province had supported Sindh’s demand informally.

“We did not move a formal request because the harvest is yet to begin in our province.”

Mr Mukhtar was hopeful that it would be easier for the provincial food authorities to achieve the procurement target of three million tons for the year after the substantial increase in the official price.

“We hope that we would not face any difficulty in our procurement drive unless the crop size is short of the estimates,” he said.

The Punjab government expects that tradable surplus of around seven million tons of wheat would be available in the market when the harvest commences.

Mr Mukhtar also agreed that flour prices would shoot up once the provincial food department stops release of wheat to the mills from its stocks by April 15. The new market price of wheat would determine the new flour price, he acknowledged.