LAHORE: A section of flour millers on Saturday alleged that subsidised wheat, meant for export, was being sold in the local market, hurting both the businesses and the national exchequer – without benefiting any one.

According to them, the subsidised wheat costs the “exporters” Rs900 per 40kg against Rs1,320 in the open market – a difference of almost 50 per cent in cost. So, the millers grinding that low-priced wheat are in a position to slightly lower the prices and drive others out.

This exporters-millers nexus is making windfall; on the one hand, they are fleecing the government in terms of subsidy at a rate of $90 (over Rs900) per ton and, on the other, still making huge profits by slightly lowering the rates. All this is being done at the cost of honest businesses, setting a wrong precedent, says Majid Abdullah of Pakistan Flour Millers Association.

He insists that the latest drop in world wheat prices, hovering around $200 per ton, has rendered Pakistan wheat more competitive. Since these so-called exporters know the system, all its loopholes and venues for corruption, they keep preparing fake documents with the help of Afghan nationals, and, of late from Dubai as well, and sell the wheat to local market, he says. With profits shrinking globally, a corresponding increase is now possible in domestic market: where would one get profit of Rs400 against an investment of Rs1,280 (official release price for exports), and that too within a few weeks, if not days? With right connections at both places and both countries having very weak or murky legal and banking systems, preparing such papers is hardly an issue. Pakistan’s historic ties with the Gulf banking and hundi systems are only an added advantage for such exporters.

The Punjab food department, however, has a different view. One of its officials claimed that the department was just a seller, not a monitor of exports and even subsidy dispersal machine. The department sells wheat at Rs1,280 per 40kg. The exports are monitored by the customs department, which issues a certificate – confirming the process and the quantity. The exporter takes those papers to the State Bank of Pakistan (SBP), which disperses the subsidy amount. Thus, the food department’s role is limited to selling wheat and clearing its stocks. If, the reported corruption is taking place somewhere else, the food department can hardly be held responsible or even asked to play monitor, the official says.

The protesting millers, however, disagree on practical grounds. They claim that theoretically it is true that the food department is just a seller and two other federal agencies – the customs department and the SBP – are actual players, but they ask who has been pressing the federation to continue with an export regime, which, of late, has become suspect? The PML-N rules both the Punjab and the Center. It is practically involved in the process on both ends. So, it needs to consider market situation before next renewal of the export regime, which has fallen due today (Saturday), they insist.

Published in Dawn, August 2nd, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play