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Flour crisis persists despite govt’s tall claims

January 09, 2008

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KARACHI, Jan 8: The federal government is expected to announce a support price of Rs500 to Rs550 for 40 kilogrammes of wheat on Thursday at a meeting of the Ministry of Food, Agriculture and Livestock (Minfal) in Islamabad.

“The area under wheat cultivation this year is less than last season because sugarcane has still not been harvested and picked up in many parts of Punjab due to inconsistent policy of government towards the growers,” a leader of growers’ association said.

Bilal Sufi, a senior leader of flour mill owners’ association in Lahore, warned of lingering wheat crisis showing no respite even during the next season because of the delay in the announcement of support price and inconsistency in dealing with farmers.

“There is going to be a worldwide wheat shortage next season,” warned another miller in Karachi. He called for building up food reserves and formulation of a wheat import programme that should ensure uninterrupted supply of wheat, flour and bakery products.

In the current season, the government estimated a record harvest of 23.3 million tons. With carryover stocks of 0.4 million from 05-06 season, the total expected availability of wheat was 23.7 million tons as against indicated domestic consumption of 22 million tons.

In a special meeting of the federal cabinet held on Monday, the government was informed that growers retained 13.5 million tons for their own consumption and one million tons for use as seed.

About half a million tons was exported and about one million tons was bought by the millers. The government purchased 4.3 million tons and the remaining 2.7 million tons was with the private sector, of which about one million tons have crossed border.

The government is convinced that at least 1.7 million tons of wheat is still available with the private sector. This wheat is now being sold at Rs22 per kilogramme in the open market.

Market analysts, however, question the assertion that growers kept 13.5 million tons of wheat plus one million tons for seed.

“Wheat problem started emerging in May last year and assumed crisis proportion by August,” a well-known commodity trader said. Wheat prices had already crossed Rs1,500 for 100 kilogramme by August as the Government was delaying wheat releases from its stocks in Punjab and Sindh. The commodity brokers were moving in Punjab and Sindh villages with bags full of money to purchase wheat from growers at Rs1200 to Rs1300 for 100 kilograms.

The Punjab-based traders diverted wheat consignments from Sindh to the NWFP and onwards to Central Asian States from where they were reaping hefty profits. Once purchased from growers, wheat was stocked in ginneries and government buildings in villages.

The Federal Agricultural Commissioner, however, asserts that wheat price across the border was Rs1,200 for 100 kilogramme as against Rs800 in Pakistan market. There is still a lot of room for profit and that’s why the millers and traders find it profitable to transport wheat and flour beyond borders rather than selling it in Karachi and Lahore.

Wheat flour price in Karachi was Rs35 a kilogramme and Rs26 a kilogramme in Lahore. The commodity was scarce in many parts of the NWFP and Balochistan and too costly in rural areas of Sindh. Ridiculous explanations were offered at the high-level meeting on Monday for wheat shortage and wheat supply. One of such explanations was that of frequent breakdowns in the power supply which brought grinding capacities of flour mills to a halt.

The total grinding capacity of more than 1,200 flour mills across Pakistan, according to millers, was more than four times the requirement of the entire domestic market.

“If only 800 mills grind wheat for six hours a day, enough flour will be available for the people of Pakistan,’’ a miller said.

The other explanation too, attributing the shortage to the overland transportation after Dec 27 tragic incident in Rawalpindi, does not carry much weight because wheat flour scarcity and price spiralling became conspicuous much earlier.

Wheat crisis is now lingering for more than a year. The government announced in October of having a list of wheat hoarders in Sindh and Punjab and announced to carry out raids, but no raids have been carried out.

As a last resort, the government now plans to distribute flour through 4,500 outlets of the Utility Stores in the country. Market analysts doubt if consumers will benefit from this distribution as they say the government subsidy goes to corrupt officials and unscrupulous traders and it has never reached growers or consumers.