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Staple food getting costlier

Updated September 09, 2013

WHEAT, wheat flour and rice became costlier in August due to seasonal as well as rains-and-floods-prompted supply constraints and in response to a general rise in inflation. Sugar remained flat and poultry meat prices fell.

Prices of Basmati and non-Basmati rice varieties are on the rise as carryover stocks are exhausting before the beginning of the new cropping season and the flood-related damages to early crops are bound to delay fresh arrivals.

Rice price-rise started with monsoon rains and subsequent floods accelerated the pace of it. Commodity dealers say aggressive buying by makers of branded rice has also pushed up the prices.

According to chairman of Karachi Retail Grocers Group Farid Qureshi, prices of branded super Basmati now range between Rs170-Rs200 per kg, up from Rs160-Rs180 per kg about a month ago. City district administration has fixed maximum retail price of Basmati-super at Rs140 per kg.

Rice dealers say whereas the prices of Basmati varieties are up because of dwindling stocks and heavy buying by brand producers, coarse rice has become costlier due to a jump in exports. In July, 232,000 tonnes of non-Basmati rice was exported against 199,000 tonnes in June.

Commodity dealers say that big export-led buying was seen in August as well. They say they are expecting the new crop supplies of coarse rice any time in October mainly from interior Sindh.

Wheat prices are also up as food departments in Sindh and Punjab are yet to begin subsidising sales of officially procured wheat to flour millers and as local demand is set to rise in pre-winter weeks and months.

A Karachi-based miller told Dawn that Pakistan Flour Mills Association and officials of Sindh Food Department would meet shortly to decide the new rate of subsidised wheat before the commencement of its supplies later this month or from early October. The Punjab food authorities point out that in the last year, supply of subsidised wheat had started from October 8, but this year they can begin earlier. They add that 4.1 million tonnes of reserves with the provincial food department were enough to meet partial requirements of flour mills in Punjab as well as in KPK. In open market, from where the millers meet the bulk of their requirement, wheat prices have been on the rise for quite some time “due to shorter-than-targeted crop in the last season and smuggling of grains to Afghanistan and Iran,” says a Jodia Bazar-based commodity dealer.

He and several other dealers say that enough wheat exports throughout the last fiscal year and recent imports of ‘sub-standard’ Russian wheat were also weighing on prices. Pakistan exported 200,000 tonnes of wheat in FY13 closing in June, and in July it exported another batch of 7,000 tonnes.

Meanwhile, the government has deferred for a month its earlier decision of allowing export of half a million tonnes of sugar. The government is borrowing time to see how the floods would affect the next sugarcane crop, ready to be harvested from mid-October or early November.

However, according to officials, sugar stocks in the country at 2.1 million tonnes are enough to meet demand till December.

But sugar millers have warned of delaying cane crushing if export is not re-allowed on time and if Trading Corporation of Pakistan (TCP) does not buy from them a total of 0.4 million tonnes of the sweetener. TCP has so far purchased 106,000 tonnes. Initially government agencies had estimated 2013-14’s sugarcane crop at around 70 million tonnes but whether actual production would match it is not clear due to recent flood-related damages to the crop. However, past experiences show that unlike cotton or rice, sugarcane crop is not affected too badly by heavy monsoon rains and floods.

“The reason is by the time the floods hit between mid-July and September, sugarcane stalks have grown tall and strong enough to avoid physical damage. Post-flood pest-attack remains a threat but its impact is more than off-set by the additional weight the stalks gain during the rains and flooding,” a cane grower from Badin district of Sindh told Dawn.

According to commodity dealers in Karachi’s Jodia Bazar and Lahore’s Akbar Mandi, prices of pulses inched up during August due to supply constraints after rains and floods. They say that prices of gram rather remained flat on the back of huge stocks. But prices may rise again after a short interval on pre-Eidul Azha buying.

In meat markets, beef and mutton rates remained strong on rising exports. Normally, the government bans exports one-month ahead of Eidul Azha. “But even in the face of such a ban we are anticipating some increase in prices between now and October 10 (a few days before the Eid) because during this time more and more animals would go to sacrificial animals’ market and supply of animals for routine slaughtering would be affected,” says an office-bearer of Karachi Meat Merchants Association.

Poultry meat prices had increased phenomenally during Eidul Fitr but receded somewhat afterwards. Poultry processors say as birds started dying after monsoon rains and floods they had to lower prices to speed up consumption despite the fact that the FY14 budgetary measures had led to increase in their cost of production.

Former chairman of Pakistan Poultry Association Khalil Sattar told media at the beginning of this month that the lowering of import duty from 50 to 25 per cent on imports of processed food has led some big poultry processors in the country to import Malaysian poultry meat and market it in the country after adding value. He informed that the practice was gaining momentum also because, unlike in the case of milk in which the decision of zero-rating sales tax on import stage was reversed, poultry imports continue to enjoy it.

“As a result, our industry is suffering,” says Sattar.

Until recently Pakistan was earning some foreign exchange through exports of poultry meat products to the Middle Eastern countries but this may get a serious setback during the current fiscal year “if normal sales tax on import of poultry products is not restored,” he adds. —Mohiuddin Aazim