LAHORE: A group of flour millers is perturbed over reports that the Punjab government is likely to fix the price of wheat to be issued from official storages, lower than fixed by other provinces, fearing it may lead to smuggling of flour out of Punjab.

“There are reports that the caretaker Punjab government is going to fix wheat issue price at Rs4,200 per 40kg, while Khyber Pakhtunkhwa has fixed it at Rs4,600 and Sindh is likely to follow the suit and this will lead to smuggling of flour out of Punjab,” says a letter written by Progressive Flour Millers Group Chairman Khaleeq Arshad and Majid Abdullah to interim Chief Minister Mohsin Naqvi.

It argues that the Food Department had procured wheat at Rs3,900 per 40kg during the last crop season and by adding storage, mark-up on bank loans for the procurement and accidental charges the cost goes up to Rs4,700 per 40kg, which means the province will have to bear subsidy worth Rs60 billion for releasing grain to the flour millers at Rs4,200 per 40kg.

It will not be a targeted subsidy as all and sundry will benefit from it and on the other hand it will encourage the flour mafia to smuggle the commodity out of Punjab and mint money at the cost of the provincial kitty, the communiqué says.

It says experiences of the past show that most of the subsidy is also embezzled by the black sheep in the department as well as in the milling industry.The letter suggests that the government should sell grain at the open market rate and during the procurement campaign, it should not forcibly pick the produce from farmers and rather allow its sale in the open market, while the Food Department should maintain only strategic reserves and enter the market when wheat rate in the open market comes down the minimum support price.

This, it says, will encourage the farmers to grow more wheat and reduce the country’s dependence on imported grain.

Published in Dawn, October 26th, 2023