KARACHI: Huge imports of wheat from July 2014 onwards have failed to bring down prices of various varieties of flour. Retailers are selling flour no.2.5 at Rs42-44 per kg fine variety at Rs48 and chakki flour Rs48-50 per kg.

The Karachi City government has fixed price of flour no.2.5 at Rs38.50 per kg and Rs45 per kg for both fine and chakki flour.

Retailers have flouted official prices and blamed the millers for not reducing the rates which have been prevailing since wheat imports got underway.

Low prices of wheat on world markets lured Pakistani importers to bring 727,687 tonnes ($182.4 million) in July-Nov 2014 as compared to 366,015 ($104m) in same period last year, showed Pakistan Bureau of Statistics (PBS) data.

The average import price comes to $250 per tonne in July-Nov 2014 period as compared to $284 in the same period last year. The Sindh government has also reduced wheat rate from Rs3,450 to Rs3,250 per 100kg bag from December 15, 2014 to January 15, 2015.

However, consumers have yet to see its positive impact on of various flour varieties at the retail level. There was also no change in price of Bake Parlour and Ashrafi 10kg bags, with both brands staying put at Rs430 per bag.

Meanwhile, an increase in wheat production also did not bring any relief for the consumers. According to State Bank of Pakistan Annual Report 2013-2014, wheat production of 25.3m tonnes in FY14 was marginally higher than the 25.0m tonnes target and the previous peak of 25.2m tonnes realised in FY11.

Wheat production would have been higher had there been no drought in the Potohar region during November and December 2013. Although government support price remained unchanged this season, the higher market prices, better water situation, and the availability of fallow land due to early maturity of the cotton crop, encouraged farmers to grow more wheat.

In addition, growers in Jacobabad and Kashmore were able to cultivate more area which was lost to heavy monsoon rains last year. The federal government, on the recommendation of provincial governments, had imposed 20 per cent regulatory duty on wheat imports from November 7, 2014 to boost sale of locally produced wheat held by the provincial governments. It is not clear why the government allowed wheat imports when the country had a good wheat crop.

After imposition of duty, importers and flour millers had suspended their future imports from black sea region, chairman Karachi Wholesalers Grocers Association Anis Majeed said.

Wheat imports were inevitable to bridge demand and supply gap. Besides, imports had actually prevented hike in flour rates instead of causing any price decline, he added.

A flour miller said he cannot comment on retail trade price but the ex-mill price of flour no. 2.5 (for chappati roti) is Rs36 per kg which was Rs39.50 per kg last year.

When asked why the millers had not reduced flour price after reduction of Rs200 per 100 kg wheat bag by the Sindh government, he said that imported wheat is already available at Rs3,200 per 100 kg bag as compared to Rs3,250 of locally produced wheat.

Published in Dawn, December 28th, 2014