LAHORE: Flour millers have decided to increase prices of their products as the food department has stopped the release of subsidised wheat to them in the province.

Millers say that the 20kg bag of flour which was earlier being marketed at a rate of Rs860 will now be available at Rs1,030, a raise of Rs170 per unit.

“The flour price may go further up provided the current wheat prices in the open market don’t drop with the arrival of the new crop,” Pakistan Flour Mills Association Punjab zone leader Asim Raza tells Dawn.

Harvesting of the new wheat crop in Punjab began two weeks ago and public sector entities, food department and PASSCO are procuring grain at Rs1,800 per 40kg, whereas farmers are also selling their produce to private players like flour millers and in many cases at a rate less than that being offered by the government. The reasons being that unlike by the public sector the payments by the millers are in cash with minimum or no hassle of documentation.

“In fact the rate of 20kg flour bag will shoot up to Rs1,100 per bag after Eid keeping in view the current upward wheat price trend in the open market besides a couple of other factors like increase in packing material rates,” says Mr Raza.

Flour millers and food department officials have been blaming each other for the ongoing flour crisis in urban centres of the province where the millers claim that the crisis was mainly caused by reduced release of wheat from its storages by the department.

Mr Raza says the issue particularly in the provincial metropolis cropped up when supplies of wheat bags were reduced from 235,000 to 196,000 bags of 20kg each because of release of grain by the food department on the basis of population.

This difference in the number of flour bags disturbed the demand and supply balance and thus leading to a crisis-like situation in certain pockets, he argues.

The official decision, he claims, was based on the report of the Joint Investigation Team (JIT) which probed last year’s wheat and flour crises, recommending that the grain should be released to mills as per population of the urban centres.

The PFMA leader says the size of the population was taken from the 2017 census without taking into consideration the increase in inhabitants of urban centres during the last five years or so since the census.

Whereas wheat was already in shortage in the open market as for the first time in the recent history poultry feed mills in Sindh and Punjab were allowed to pick around 1.6 to 1.8 million tonnes of the grain surplus from the market due to failure of the maize crop, which was earlier the main ingredient of the poultry feed.

Mr Raza suggests the government to also consider the rural population while allocating quota to the flour mills as because of changing eating habits, besides other social factors, the countryside people are also turning towards the flour produced by the mills instead of the conventional chakki atta.

At least a 25 per cent increase in mills quota is needed to cater to the requirements of the population living outside the municipal limits in the province, he asserts.

A senior food official says the recent flour crisis was caused when the millers stopped their supplies to the market because they wanted to earn more from the subsidised wheat provided to them by the department.

“After getting wheat at Rs1,400 per 40kg official rate the millers were required to sell flour at Rs860 per 20kg bag. The department stops issuing them wheat from last week of April till the advent of the month of October the millers have to grind the wheat purchased by them during this period and set the flour price accordingly.

“This year the industry disrupted and reduced flour supply in March though the department was issuing them wheat as per their quota because the millers wished to earn extra bucks by showing that they are marketing the flour produced from the wheat purchased at market rates,” says the official, requesting anonymity because he is not authorised to speak to the media.

Responding to a query about the increase in flour rates, he hints that the government may announce DC (official retail) rate for the flour to control its prices.

Published in Dawn, April 28th, 2021