Situationer: Food crisis in Sindh takes an ugly turn with flour shortage

Updated November 21, 2019

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Sindh is hit by a double whammy insofar as provincial food sector is concerned. While growers sold their wheat crop this season for lesser price early this year after the government did not procure the crop, consumers are now paying more to buy a kilogram of flour. — Reuters/File
Sindh is hit by a double whammy insofar as provincial food sector is concerned. While growers sold their wheat crop this season for lesser price early this year after the government did not procure the crop, consumers are now paying more to buy a kilogram of flour. — Reuters/File

HYDERABAD: Sindh is hit by a double whammy insofar as provincial food sector is concerned. While growers sold their wheat crop this season for lesser price early this year after the government did not procure the crop, consumers are now paying more to buy a kilogram of flour.

So, market players or traders remained the main beneficiary by making a quick buck thanks to government’s indecision. It perhaps also points to a defective wheat procurement policy.

Consumers are buying expensive flour at chakki invariably at a rate of Rs58/1kg-Rs60/1kg which was otherwise Rs40 per 1kg until recently. The federal government has intervened on Sindh’s request to assist it with release of 400,000 tonnes. Still, the surge in flour’s price is unending.

Out of its stocks of 1.6 million tonnes of wheat procured this year, the Pakistan Agriculture Storage and Services Corporation (Passco) is to release 400,000 tonnes. Of them, 100,000 tonnes have been released in Sindh which is being lifted by the food department from Passco’s godowns. Rest of 300,000 tonnes (3m bags of 100kg) would be released in December. Major quantum of it (2.6m bags of wheat) would be consumed in Karachi.

Sindh Food Secretary Laeeq Ahmed Khan told this reporter that the provincial and federal governments would share incidental charges of 400,000 tonnes of wheat ie Rs450 per 100kg bag on 50-50 basis. “Incidental charges to be shared are calculated at Rs900 per 100kg. Passco will get cost of wheat procurement,” he disclosed.

The food department had also started releasing its stocks from Oct 25. Currently, the food department has around 800,000 tonnes of stocks. With 400,000 tonnes of the federal supplies, it would have 1.2m tonnes of wheat to meet the demands of flour mills and chakki owners by next procurement season, which begins in April 2020.

Multiple factors

Multiple factors could be attributed to panic being witnessed in Sindh’s market. Initially, the Sindh government did not procure wheat crop this season in view of its 800,000 tonnes stocks. Sindh remained short of meeting sowing target of 1.150m hectare (ha) in 2018-19. Production target remained unmet, too.

Then came the rains that damaged the crop in Punjab’s 15 districts, prompting its traders to buy crop from Sindh. Against its production target of 19.510m tonnes of wheat, 19.369m tonnes were produced in 2018 crop. Sindh got 3.5m tonnes against the target of 3.8m tonnes, according to figures shared in the Federal Committee on Agriculture (FCA).

Another factor, said a food official, was trend of use of wheat by poultry industry for feed. “Poultry industry uses maize for feed, but maize is being used for oil extraction. So, poultry industry opted for wheat as feed alternate,” he said.

While wheat’s exports were open early this year, it reached Afghanistan through informal channels. “These factors disturbed our surplus regime in wheat,” he said.

Wheat’s price has risen to Rs4,900 per 100kg bag in Karachi. Reports indicate federal releases have reduced prices to Rs4,300 per 100kg bag. Further decline is likely with food department’s releases to stabilise market.

But chakki owners and traders said provincial releases are negligible and speak of disparity in distribution of wheat among chakki and flour mill owners. “We were initially provided 150kg of wheat per stone per chakki which too has now been reduced to 133kg. But each flour mill was being released 258 bags per day by the food department,” said Hyderabad Atta Chakki Owners Association general secretary Haroon Arain. Arain says people in Hyderabad mostly prefer chakki’s flour which has all of wheat’s ingredients like super fine flour and granulated wheat flour.

Hyderabad Chamber of Small Traders and Small Industry president Doulat Ram Lohano said food department’s wheat releases were just peanuts. “It’s not going to meet flour requirement of the people in Hyderabad. Mills get more than their requirement and flour produced by mills is transported to other cities,” he said.

The food department last year released 950,000 tonnes of wheat to chakki and mill owners between November 2018 and March 2019. As close to 0.8m tonnes are available with the food department, the government decided against procuring crop in 2019 despite food department’s insistence.

Usually, the government procures around 23 per cent to 25pc of the total crop to ensure balance in market. Procurement normally remains around 1.2m tonnes. Sindh has procured even up to 1.5m tonnes of wheat once also. But this year traders and hoarders got full advantage of Sindh government’s no-procurement policy.

According to growers, they sold wheat for Rs1,050/40kg to Rs1,150/40kg and traders got advantage of it. Average price of Rs1,050 to Rs1,150 per 40kg in the absence of procurement against support price of Rs1,300 per 40kg was inadequate for growers. Growers were then piqued by the government’s indecision and had feared that wheat crisis might hit Sindh.

Sindh Abadgar Board vice president Mahmood Nawaz Shah believed it was mala fide intention and incompetence on government’s part. “The government had surplus stocks, but where have those stocks gone and why this crisis?” he quipped. “When the government refuses to play its regulatory role, producers and consumers suffer. Only a third party always takes advantage of such situation,” he asserted.

In 2013-14 season, Sindh alone got four million tonnes of wheat production in line with target, prompting the agriculture department to revise it upward ie 4.2m tonnes. Since then it is missing target. And therefore it had to be revised downward at 3.8m in 2018 by the agriculture department after remaining unchanged till 2017-18.

No silos for procurement & wheat scam

The food department stores around 700,000 tonnes in its official storage. And the remaining quantity is kept on the elevated platforms under tarpaulins out of total procured quantum. The food department is said to be building storages to store around 5,000 wheat bags of 100kg each.

Around 1.4m tonnes of wheat can be kept on these elevated surfaces. The Sindh food department has been unable to build silos and still opts for conventional storage.

A silo project was designed off Karachi-Hyderabad Superhighway, but it was not completed. Silos could better hold wheat crop and protect it against climatic conditions which otherwise affect the crop.

The Sindh food department is currently facing a multibillion rupee wheat scam as well involving the National Accountability Bureau (NAB) reference and Anti-Corruption Establishment (ACE) embezzlement cases.

A sizeable tonnage of wheat has been missing from food godowns. The food department has not yet officially disclosed figures of missing wheat crop yet. “Plea bargain has taken place with the NAB in this scam,” said an official source.

Published in Dawn, November 21st, 2019