Nexus of food dept, millers seen behind rising flour prices

Published February 2, 2023
A worker grinds wheat at a small-scale flour mill in Hyderabad’s Liaquat Colony.
— Umair Ali
A worker grinds wheat at a small-scale flour mill in Hyderabad’s Liaquat Colony. — Umair Ali

HYDERABAD: While harvest of new wheat crop is still a month’s away, flour prices continue to increase. The Sindh food department has started releasing wheat crop procured at a lesser rate last year for consumers at an exceptionally higher price.

Given the country’s present economic outlook amidst talks of multi-billion-rupee packages and withdrawal of subsidies to comply with international lender’s conditions, there is a fear that consumers may not get a sigh of relief in the days to come as far as flour prices are concerned.

People are unable to get whole wheat flour at the government notified rate.

Flour prices still hover around Rs130 per kilo despite the fact that the official price for chakki flour is set at Rs107 per kg and flour mills’ rate at Rs98 in January.

Mills are selling wheat instead of producing flour

The commodity is being sold at Rs150 to Rs160 per kilo for the last couple of months, which is attributable to hoarders’ supply of wheat in open market at an exorbitant rate.

Chakki owners say that they are getting wheat supplies from flour mills through brokers in open market as this remains the only outlet for them to keep their businesses going.

Last year the provincial food department had procured wheat at Rs5,500 per 100kg from farmers, although it could not meet the target of 1.4 million tonne procurement.

Only a total of 900,000 tonnes could be procured by the food department.

The Sindh government has announced a support price of Rs4,000 per 40kg.

The food department until last year had released wheat to flour mills and chakkis until Sept 2022 at the rate of Rs58.25 per kg.

Wheat release price has been increased to Rs85 per kg or Rs8,500 per100kg bag for the very wheat procured at Rs58.25 per kg in 2021-22 season, recording 31pc increase in release price.

Ex-flour mill rate was notified at Rs95 per kg and retail at Rs98 per kg, according to district administration Hyderabad official Qaim Akbar Nimai.

For chakkis, he said, the government has notified an ex-chakki rate of Rs105 per kilo and Rs107 for retail sale after they get wheat at Rs85 per kg from the food department.

Procurement failure

The Sindh food department works under ministry of foods only to deal with one of the four major crops — wheat. Considering its limited storage capacity, the food department procures only 37pc to 38pc of total grain production in Sindh. For last several years, regrettably though, the department was unable to procure wheat as per its target which has been set at 1.4m tonnes.

While farmers sold their produce in open market for lesser price, consumers didn’t get benefit of the rate either.

“We fail to understand why food department performs so badly every year” asked Mahmood Nawaz Shah, vice president of the Sindh Abadgar Board (SAB).

He questioned why the department was releasing last year’s stock at higher price for consumers in these testing times of unending inflation.

Since 2017-18, the food department didn’t meet procurement target of 1.4m tonnes.

It procured 0.9m tonnes in 2021-22. Grain wasn’t procured in 2018-19. In pandemic 2020 government had even withdrawn procurement related conditions for farmers yet it failed to meet procurement target which was either sold in market or smuggled to other destinations.

Sindh food secretary Raja Khurram didn’t respond to phone calls for queries.

Food dept, mills ‘nexus’

Everything revolves around a nexus between the food department and flour mills.

Mills get major chunk of subsidised wheat annually under the government’s release policy.

Chakkis on the other hand, by and large, cater to flour needs of consumers in rural and urban areas yet they end up with negligible quota.

“Brokers are supplying us wheat from mills in open market. The mills are getting wheat supplies from the food department warehouses at subsidised rate and selling us at open market rate,” said a big chakki owner, Mr Farrukh (name changed to protect identity).

According to Qaim Nimai, 224 chakkis exist in city, which get quota lesser than millers.

Chakki owners add grinding cost of Rs22 per kg. The government’s bureau of statics calculates this cost at Rs17 and food department at Rs16. Going by his statement, it is to be determined whether 224 chakkis are indeed functional as each of them claim quota from food department.

“We are getting wheat sufficient for four days alone for grinding. Rest comes from open market,” said Mr Farrukh.

According to him, until 25 days ago 100kg bag was sold at Rs12,500 in open market after the price was jacked up from Rs8,200.

“The rate stood at Rs10,800 on Jan 31 in open market. Supplies are coming from millers through brokers as millers are selling wheat instead of producing flour for consumers which is otherwise needed,” he said.

Mr Farrukh explained “after adding transportation cost, official wheat cost will come to Rs88 per kilo and then comes overhead grinding cost which takes flour’s price to Rs110 at our end provided we get wheat from food department warehouses. But when we switch over to market based supplies cost increases prompting us to sell flour for Rs130 per kilo to consumers”.

DC Hyderabad’s charge-sheet against mills

Mr Farrukh’s contentions give credence to the fact that a strong nexus exists between flour mills and the food department.

This could be gauged from the fact that Hyderabad DC Fuad Ghaffar Soomro in his Jan 12 communication to the Sindh food secretary had recommended that “quota of those flour mills which were not providing flour as per their allocation and not contributing in these hard times may be suspended after proper inquiry and their quota may be allocated to the performing mills in consumers’ interest”.

The DC’s had listed 12 mills with break-up of wheat releases and supply of 10kg flour in four days. This showed that none of the mills met requirement of 8,808 10kg bags’ supply to consumers at subsidised rate as per quota. They were provided 25,323 flour bags of 10kg per day thus noting a huge gap.

The DC’s letter said 30,000 bags of 100kg were allocated for chakkis. If 200 chakkis were there, each chakki would get 150 wheat bags. It would translate into 1,275 10kg flour bags per month or 49 bags per day for consumers.

He recommended that if chakkis were bound and allowed to work at full capacity, they could grind and provide average 500bags of 10kg flour for a week.

The SAB leader feared regardless of government’s estimates of better harvest, the productivity would be low. “I wish I am wrong but I feel we will confront another wheat crisis. Per acre grain productivity is going to hit because of late sowing which is due to belated dewatering. Secondly, lands were not prepared properly for production”, he said.

Published in Dawn, February 2nd, 2023



Lurking militancy
Updated 23 Mar, 2023

Lurking militancy

Politicking on the issue of terrorism will only bring more harm to the country.
Disaster response
Updated 23 Mar, 2023

Disaster response

THE earthquake which struck Afghanistan and the northern parts of Pakistan late Tuesday, has come as a stark warning...
No interest
Updated 23 Mar, 2023

No interest

HOW high must promised returns be to encourage foreign investors to divert their dollars to Pakistan? Apparently,...
Vox populi
22 Mar, 2023

Vox populi

History will not judge kindly those who throw the laws of this land in the bin to keep just one man away from power.
Iraq’s wounds
22 Mar, 2023

Iraq’s wounds

TWO decades after the US military machine — aided by the ‘Coalition of the Willing’ — stormed into Iraq, ...
Mental health epidemic
22 Mar, 2023

Mental health epidemic

THERE are mounting stressors in the day-to-day existence of average Pakistanis. Rising inflation and unemployment...