KARACHI: Sindh’s new wheat crop has landed in Karachi’s wholesale market with the highest-ever price tag of Rs5,000 per 100 kg bag, fuelling fears it may trigger price distortions in the country, it emerged on Wednesday.

The sharp hike in wheat rate is due to a massive increase to Rs2,000 per 40 kg in the wheat procurement price by the Sindh government. Last year, the wheat procurement price in Sindh was fixed at Rs1,400 per 40kg, which took the per 100kg bag price to Rs4,100.

Meanwhile, market retailers further pushed up the rate of branded five kg bag of fine flour up to Rs380 from Rs370 and 10 kg bag for Rs740 versus Rs720. The retailers maintain that the price hike came after millers increased prices. Earlier this year in January, five kg and 10 kg flour bags were available at Rs350 and Rs680, respectively.

“I have not seen such a big difference in the open market rates of wheat in many decades. This is because of the high support price of wheat by the Sindh government,” said Pakistan Flour Mills Association (PFMA), Sindh, Chairman Chaudhry Muhammad Yousuf.

Massive increase in support price by Sindh may cause price distortions

Flour millers are already fighting a case with the federal government, seeking uniformity in wheat support prices all over the country. According to reports, the Punjab government has fixed Rs1,650 per 40 kg support price while Sindh is offering Rs2,000 per 40 kg to its growers for this season.

In a letter to Federal Minister for National Food Security and Research Syed Fakhr Imam, PFMA Central Chairman Badar-ud-Din Kakar and Sindh Zone Chairman said that mismatched policies in the four provinces were resulting in difficulties.

Urging consensus in wheat procurement price and flour rates, the PFMA representatives urged the federal government to exercise its constitutional obligation by bringing purchase/sale rate of wheat and flour on one level within the country to provide equal facilities to the masses during 2021-22.

They recalled that last year, provincial governments had announced wheat support price with mutual understanding, while this year the rate of wheat and flour are going to be different in all the provinces which would create an atmosphere of chaos.

On the arrival of the new Sindh crop, Mr Yousuf said: “The new Sindh crop has a moisture content of 18-19 per cent which is not feasible for wheat grinding for flour manufacturing.”

“It will take a week to bring the moisture level to 10-11pc which will be fit for flour-making,” he said, adding that millers are using imported wheat for making various varieties of flour.

The Sindh crop will fully reach the markets by April 15-16 while Punjab crop will start arriving from the second week of the next month.

When asked about the latest hike in flour prices, the Sindh PFMA chief rejected the retailers’ stance and claimed that millers had not enhanced the rate for the last two months. Flour No 2.5 price has been intact at Rs60 per kg followed by fine and super fine flour at Rs62 per kg, he said. “Rate of flour in Karachi is cheaper than Punjab by Rs5 per kg,” he further claimed.

When asked why there was no price relief for consumers despite huge wheat imports and local crop last year, he said that there was a need to liberalise the policy in which millers get wheat freely without any bottleneck to ensure smooth supply of flour and stability in prices.

Published in Dawn, March 18th, 2021