LAHORE, Oct 22: The millers on Monday increased flour price yet again – fifth time in the last seven weeks – by Rs12 to Rs14 per 20kg bag, taking the ex-mill rate to Rs618 and retail price to Rs640 for each bag.
The millers also unilaterally added Rs4 to the transportation cost and increased profit margin for retailers by another Rs5 per 20 kilo bag. For the last few years, retail margin had been Rs5 for each bag, which has now been taken to Rs10. The equation now is: Rs618 ex-mill, Rs630 for shopkeepers and Rs640 retail price.
According to the millers, the department had agreed to Rs617.50 per 20kg bag and moved a summary accordingly during the tenure of the previous director (food) before he left 22 days ago. That is precisely why the millers have increased the rate now. The transportation cost had increased because of fuel factor, which was to be reflected in the price, and the retail margin had also been constant for the last many years. All these factors necessitated increase and the millers had no choice but to go for it.
“The open market has completely dried up and the millers are now totally dependent on the official releases,” says Asim Raza of the Pakistan Flour Millers Association (PFMA).
The official releases are quota-based, making it hard for the millers to operate freely and recover the full operational cost. Thus, the millers have to occasionally review the price and keep adjusting it to recover their cost. “The ex-mill price is closer to what the department agreed and there is nothing unusual in the new price,” he says. The department, however, has different idea about releases. “The millers have not been able to lift more than 45 per cent of their allotted quota in Lahore and 20 per cent in Gujranwala region,” says a departmental employee.
It is thus unfair to blame restricted official release for price increase. The millers should justify the increase on other than release factor. In the last 12 days since releases started, none of the districts where liberal issuance – whatever a miller wants to purchase – had taken effect, which includes DG Khan, Multan, Sahiwal, Faisalabad and Bahawalpur, have touched full allotted figures. So, finding fault with the release pattern sounds a hollow excuse, he says.
“The millers claimed that the department agreed to this rate before my arrival and moved a summary,” says Director (Food) Usman Yunus.
“I need to check the veracity of their claim in the morning, and proceed accordingly. But their claim of wheat shortage is certainly not true. The Punjab has surplus wheat (4.1 million ton stock against releases of 3.2 million ton) and so does the Sindh province. For other additions (transportation and retail margin), the department would have to sit with the millers and trash them out.”