LAHORE: A group of the Pakistan Flour Mills Association has urged the government to ‘overhaul’ its wheat policy by withdrawing wheat quota and subsidy system, which it terms ‘the mother of all problems’ in the flour sector.

“The progressive, efficient and leading group of flour millers” led by Majid Abdullah and Khaleeque Arshad has written to the federal minister for national food security & research suggesting the government that the flour milling industry should be bifurcated with one group having official wheat quota and the other no quota.

Under the Diminishing Subsidy policy, the millers not desirous of getting the official subsidised wheat will be allowed to buy and stock wheat (at harvesting time) for their entire year’s consumption. These will pack only 15-kg Super flour bags and other wheat byproducts with packing colours different from that of the mills getting subsidised wheat from the government.

These mills will also be free to fix prices of their flour and other products as per open market wheat rates without any intervention from the food department, and will also be allowed to send their products to other provinces and export it.

Proposes bifurcation of mills for quota, market purchase

The Group-2 will comprise the mills opting for subsidised wheat quota from the government and shall abide by all rules and regulations set by the food department. These will not be allowed to stock wheat (at the time of harvest), will run only on a day-to-day basis during the (March to September) harvesting season and sell their products only in the local market.

The progressive millers argue that the bifurcation of the industry on these lines will enable the government to monitor the use of its subsidy in a better and efficient way since the number of mills will be reduced.

They say it will also help the government cut its investments on wheat procurement and incurring heavy incidental costs.

“By adopting this policy, the provincial governments will start reducing the wheat procurement targets by half a million tonnes a year (in case of Punjab) and other provinces by the same percentage, thus cutting the procurement to reach a strategic reserve level,” says the letter.

Meanwhile, the flour millers will increase their warehousing facilities year by year and in a few years time, the efficient flour mills will have ample storing capacity, replacing the government stocking and weeding out the inefficient mills, which rely on official wheat quotas.

“A healthy competition among efficient mills will lead to lowest possible flour rates driven by a free-market economy. Export of wheat and wheat products will earn foreign exchange for the country if we have bumper crop size,” it says.

Published in Dawn, January 11th, 2022