LAHORE, May 19: The Punjab food department has so far procured over two million tons of wheat, with crop arrivals at its centres reducing by the day.

According to department officials, after sustaining a momentum of around 70,000 tons a day during the last few weeks, the crop arrival dropped to 50,000 tons by Thursday. It would drop further in the days to come. They expected the drive to fetch around 2.7 million tons by the end of procurement.

“The striking feature of the wheat trade so far is the absence of millers from the market,” says Muhammad Ali, a wheat trader.

“Most of the wheat arriving in the market lands in the lap of Punjab food department. Millers are active in Rahim Yar Khan or Dera Ghazi Khan but in the central Punjab their buying is slow. Only those millers are actively buying who have money and storage space,” says Abdul Rehman of Farooqabad.

“They know that they would be making a huge money on flour price in the next few months. At present, most of the wheat is going to the food department and millers are just staying out of purchase. The millers would press the food department to start releasing wheat after two or three months as the open market becomes dry. The department, which has massive stocks, would not mind early releases. But the catch would be in the price: the department would release wheat somewhere around Rs450 per 40 kilograms, which would naturally reflect in flour price. That is where the millers procuring wheat now would be making huge money. Even those purchasing with bank money would only incur Rs30 per bag (100kg) in the next three months, but making Rs80 to Rs100 per bag,” he said.

Majid Abdullah of Pakistan Flour Mills Association (PFMA) maintains that millers need not purchase wheat now. “They calculate their purchases on expected wheat quota of the food department,” he said.

This year, because of huge stocks, the department would be making liberal releases. “If one can get as much wheat as he wants from the department, why invest money on wheat now,” he said.

Substantial increase in interest rate had also become a big deterrent, he said and explained: “Around seven to eight per cent till last year, it has gone up to 11 to 12 per cent.

The government did not provide any relief to the millers on that account and just ensured that they remained out of the purchase. The millers now know that PASSCO had around 700,000 tons of carryover and the food department around 1.3 million tons — two million tons in total. Sindh also has stocks. The Afghanistan market, which used to consume some portion of Pakistani wheat, has almost been lost because of export duty. All these calculations are keeping the millers away from purchasing now.”

Muhammad Latif, a banker, said the millers knew that their profit was in the flour price rather than wheat.